With EPC’s firmly back in the spotlight and with the new regulations approaching we take a close look at what the changes are, what you need to do to comply and how they may affect us as landlords or property managers.
What is an EPC?
Ok, so we are not about to patronise you here and demonstrate the sucking of the proverbial egg. You don’t need to be a property guru to be familiar with the term EPC, but for those who are completely new to the industry and perhaps are not familiar with the term, we will give you our 8-second layman guide to an EPC.
EPC stands for ‘Energy Performance Certificate’ and just like Ronseal it does exactly what it says on the tin, and by that I mean it is an overview of how a particular property performs in relation to energy or rather more accurately how energy efficient the property is.
It has been law to provide tenants with an EPC since the 6th of April 2008 and to clearly show the EPC rating on any property advertised since the 9th of January 2013. The latter has been enforced by the threat of a £200 non-compliance fine, but the new laws which come into effect on 1st April 2018 and 1st April 2020 respectively are set to throw all this wide open and maybe just maybe cause a very small stir for a very small amount of you.
What do the new regulations state?
Here at WOPT our team have been working tirelessly to develop simple ‘no-nonsense’ guide to the changes, and we think we have it here for you, for free, because we care!
Simply read through our list below and see which applies to you to see if there is any action you need to take
- If the property has a current EPC rating of E or above your activity level, as a result, is that not too dissimilar of a sloth, garden slug or giant tortoise. And for those of you who are not zoologists or are not 100% clear on this, it basically means nothing at all!
- If the property has a current EPC rating of F or G but has a current AST in place, and you have no plans to renew that tenancy, i.e. you are continuing with your rolling contract then again your immediate action levels are that of a sloth, garden slug…… ok, you get the gist! Job done!
However be prepared, you will need to make previsions to get your overall rating improved and up to a rating of E or above by 1st April 2020.
- If the property has a current EPC rating of F or G but has a current AST like in our example above, BUT you plan to renew this at the end of the term, then the minimum efficiency standards will apply as soon as you renew the contract. It may be worth considering a rolling contract at this point if you are unable to bring the rating up to standard in that time. Remember that this will need to be implemented before 1st April 2020 anyway.
- If the property has a current EPC rating of F or G and is empty or untenanted, then you will be required to adhere to the new law as of 1st April 2018. This means you either let the property before this time buying you a couple of years grace or you do the inevitable and bring the property up to standard before you rent it.
Somethings to be noted on the above scenarios are:
- If the initial fixed term of the AST (shorthold or non-shorthold) comes to an end after the 1st of April 2018 and subsequently falls automatically to a rolling tenancy or a ‘statutory periodic tenancy’ then this is deemed a new contract or new letting for these purposes and the new regulations need to be adhered to.
An example being, the six months fixed term was started in December 2017, therefore the initial term ends in May 2018, one month after the new laws comes into effect. This would usually mean that the tenancy is an existing tenancy, and would harbour no action. Think again. If the property has an F or G rating, then you need to make previsions to bring the standard up to and E.2. This one may confuse or baffle you, BUT there is a loophole that will reflect a very small portion of existing tenancies out there. Like previously mentioned it became law to provide your tenant with an EPC from 6th April 2008, however EPC’s only last 10 years and there is no obligatory requirement to obtain a new EPC if the tenant is still in place.
- This means that if your property has a rating of F or G, but you are still letting to the same tenant in 2020 (meaning the tenancy is more than 10 years old), then there is no need to obtain a new EPC, therefore no need to adhere to the new regulations. As soon as this tenancy ends, of course, there will be a mandatory requirement to bring the property up to specification before you either re-let or sell the property. As far as we are aware, there are no plans to close this loophole.
Note: here at WOPT we believe in responsible letting so even in the case of the above we would always recommend that the property is brought well in line with the required standards.
Flats, Bedsits and HMO’s
Self-contained units such as flats need their own EPC. Even if the building has its own obligatory EPC, then it is the individual flats, not the building’s certificate that needs to be issued to show that the minimum standard has been met.
This one could open a can of worms so I am going to keep it light and general so as not get roped into the whole S21 argument.
So IN GENERAL, non-self-contained units such as some bedsits or HMO’s do not need their own EPC, however, if the property has an obligatory EPC, like in the case it has been sold or bought since it became law to provide EPC’s with the sale AND this EPC is current then, yes you guessed it, the minimum standards do apply, until of course, the EPC runs out!
Exemptions to the rule
Ok, so there are some exemptions to the rule. Listed buildings, devaluation of the property, unable to gain consent, cost-effectiveness and even a six-month grace for new landlords, but if you feel that you may be mitigated because of one of the above you should seek further advice.
Be warned that non-compliance can carry hefty fines of up to £4000
The Government has declared its wish to raise these standards further, such that the minimum standard is likely to rise to a D rating and a C Rating in 2030.
To see if your property has a valid EPC certificate and to see its current rating, simply accept the terms and input the relevant postcode into the following link online EPC register