Making homes more energy efficient is vital if the UK is to meet its commitment to cutting carbon emissions and helping to halt climate change. For landlords, ensuring properties are well insulated and installed with energy saving measures is important too – to give tenants a warm and comfortable home with reasonable energy bills.
This year, however, energy efficiency is about more than good practice – it is a legal necessity. The government’s domestic Minimum Energy Efficiency Standard (MEES) regulations enforce energy efficiency in the rental sector. The regulations apply to all domestic privately rented properties with assured shorthold tenancies.
What do the MEES regulations say?
Under the regulations, since April 2018 all new tenancies must achieve an Energy Performance Certificate (EPC) rating of at least E. An EPC rates how energy efficient a property is on a scale of A to G, with A being highest. Any property, which has been sold, let or modified since 2008 is legally required to have an EPC.
As well as giving the property an energy efficiency rating, the EPC also sets out measures you can take to improve your score. You need to have an EPC inspection carried out every 10 years.
Under the law, landlords are not allowed to grant a new tenancy for any property rated F or G – they must take steps to improve its energy efficiency first. From April this year, all existing tenancies must also achieve an energy rating of E or greater.
In other words,
- If the tenancy started before 1 April 2018, you have until 1 April 2020 to improve the rating of your property to an E, if you plan to keep letting it.
- If you plan to enter into a new tenancy before 1 April 2020, you must ensure you meet the standard before the new tenancy is signed.
- If the tenancy started after 1 April 2018, you must take action immediately to make sure the property reaches an E rating.
If your property is currently rated F or G, and you have made energy efficient improvements since your last EPC assessment was carried out – if you have had a new boiler or double glazing fitted for example – it is advisable to get a new EPC certificate, as you may not be affected by the MEES regulations.
How do I pay for improvements?
The government has introduced a cost cap on energy efficient improvements, meaning you should never need to spend more than £3,500 (including VAT). There are three funding options open to you:
- Third party funding – grants and payments may be available to landlords to help them make energy efficient improvements. These include grants from local authorities and the Energy Company Obligation, funded by energy companies. Find out more on the government website. The cap doesn’t apply to improvements which are funded by third parties.
- A combination of third-party funding and self-funding – if you receive some funding but it is not enough to bring your property up to standard, you may need to top it up with your own money.
- Self-funding – if you aren’t eligible for any external grants you will need to pay for the improvements yourself. If it costs less than the £3,500 cap to improve your property, you will only need to spend as much as it takes to achieve an E rating.
What if the improvements cost more than £3,500?
If you cannot improve your property to EPC E for £3,500, you should make all the improvements you can up to that amount, then register for an ‘all improvements made’ exemption. Find out more about this on the government website.
There are various other exemptions, which you may be eligible for too – for example a wall insulation exemption can be used if fitting this type of energy efficiency measure would have a detrimental effect on your property.
Most exemptions last for five years, after which you will need to try again to bring your property up to standard or register for another exemption.
Should I invest in energy efficiency?
If the improvements will cost you more than £3,500, and you can afford to make them, it may be advisable to go ahead regardless of whether you could have obtained an exemption. Regulations are likely to become increasingly stringent over time and it may cost you more to complete the improvements later.
The government has committed to improving energy performance standards of privately rented homes in England and Wales, with the aim of seeing as many as possible being upgraded to a B or C rating by 2030.
Energy efficiency improvements could have numerous other benefits for your property, from avoiding problems with damp, to attracting tenants and making it easier to sell if you wish to.
What can I do to improve my property’s energy efficiency?
Examples of energy efficient measures that will improve your property’s rating include installing floor insulation, switching to low energy lighting, adding double glazing, increasing loft insulation and changing to a modern heating system. Adding renewable energy sources such as solar panels or ground source heating can really boost an EPC score too.
If you are a landlord with property in Wimbledon, we would be happy to advise you about the many aspects of letting homes. Please contact us today to find out more.