Domestic Properties

The Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2019 come into force on the 01 April 2019 (‘the 2019 Regulations’). The 2019 Regulations amend The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 (‘the 2015 Regulations’).

2015 Regulations

The 2015 regulations prescribed a minimum level of energy efficiency for private rented properties, being an energy performance indicator of band E.

Landlords whose properties have an energy performance rating of F or G are prohibited from:

1. Granting a new tenancy of the property after 01 April 2018; or

2. Continuing to let the property after 01 April 2020,

Unless a valid exemption was registered on the National PRS Exemptions Register or landlords could run the risk of enforcement action and could be liable to pay fines up to £4,000 and suffer adverse public exposure.

One of the exemptions under the 2015 Regulations was a “no cost to the landlord” provision which allowed landlords to be exempt from carrying out energy efficiency improvements if no funding was available.

New 2019 Regulations

Background

There are around 290,000 substandard private rented sector homes across England and Wales, representing 6% of this market. Amendments to the 2015 regulations were required as many landlords were unable to obtain the funding required to carry out the necessary improvements to substandard properties (which have an F or G rating). The key change being brought in is the removal of the’ no cost’ exemption and the addition of a requirement upon landlords to contribute to the cost of improvements to ensure less properties are substandard.

Changes to the 2015 Regulations

1. The new regulations introduce a requirement for landlords to contribute to the cost of improving their sub-standard property (which has an F or G rating) up to the value of £3,500 (inclusive of VAT) which can include third party funding.

2. If the rating cannot be improved because the cost of the works is more than £3,500, in order to qualify for the exemption, landlords will need to provide copies of three quotations for additional improvement works which each exceed the cap.

3. Under the 2015 Regulations, Landlords were able to apply for a ‘no-cost’ exemption which would be valid for a term of five years whereby they could let their substandard property on the grounds that they would have to incur costs to improve the property and no funding was available, however, this exemption will no longer apply under the 2019 Regulations. Any existing ‘no-cost’ exemptions will end on 31 March 2020.

4. From the 01 April 2019, landlords will not be able to claim a ‘consent exemption’ where the tenant has withheld consent for energy efficiency improvements under the Green Deal Finance Plan.