Poor energy performance will make 10,000s rentals un-lettable by 2018

As the mercury falls and fuel bills rise, many landlords will be contacted by tenants who feel the property they rent is too cold and too costly to run. Sadly, our glorious housing stock spans hundreds of years and with age often comes poor energy efficiency.

It’s such a cause for concern that Government is introducing a new regulation that will require landlords to ensure every property they let has a minimum energy performance rating of E. In fact, it will become unlawful to let properties with EPC ratings of F and G (the lowest two ratings) in three years time.

Although this new lettings regulation doesn’t take effect until April 2018, tenants can start demanding changes – such as better insulation – as soon as 2016. The aim is to address excessive carbon monoxide emissions and also cut the energy bills of tenants, who are estimated to pay £1,000 a year more than the average annual bill due to poorly insulated homes.

“There are some eye-opening statistics where rental propertys’ energy efficiency is concerned,” comments Paul Broomham, Jones Robinson’s Lettings Director. “It’s estimated that 1 in 10 buy-to-let properties will be un-lettable in 2018 and with over 4.4 million houses in the private rental sector, hundreds of thousands of lets will need upgrading. We are urging all our landlords to take action now so they meet the deadline in good time.”

Our advice for landlords is as follows:

  • Commission a new EPC now to find out the latest ratings of any rental portfolio
  • Take imminent action for properties that are rated F and G
  • Devise a short- to mid-term plan for properties that are E and borderline D as, left unattended, they will quickly slip into the unlawful rating area
  • Plan and budget now so the April 2018 deadline is met without issue
  • Use void and end of tenancy periods to overhaul a property
  • Seek professional advice on re-gearing leases or re-marketing properties before 2018

The changes necessary to improve a property’s energy rating can be expensive, so the Government has introduced the Green Deal – an energy efficiency finance package. This loan covers insulation, draught proofing, double glazing and renewable energy technologies. There are no upfront costs for the landlord to pay. Instead, the cost (plus interest at a rate of around 7%) is paid back gradually via the property’s electricity bills. Landlords thinking of using the Green Deal must seek the tenants’ permission if the utility bills are not included in the rent. A Green Deal assessor can visit any let property to produce a report containing energy-saving recommendations and illustrations of how much money could be saved with changes.

Broomham concludes: “Whether your rental property is a Georgian Grade II listed house in Shaw Road, an Edwardian residence in Chesterfield Road, a cute cottage on Kendrick Road or a Victorian terrace on Jubilee Road, there’s a chance that it will become impossible to let in the next three years. Forward planning is strongly advised to minimise disruption to the tenant, lessen the financial impact for the landlord and to prevent properties from falling into F and G ratings in the future. Unlike other new lettings laws, the Government has given landlords advance warning, so there really is no excuse.”

If you are a landlord and are unsure of what the new regulation may mean for your let properties, we’d be delighted to explain the changes in more details. Contact the Jones Robinson lettings team today for advice.

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