Minimum Energy Efficiency Standards for Rented Property

Minimum Energy Efficiency Standards for Rented Property

Overview

The 2015 Energy Efficiency Regulations, passed in March 2015, set out minimum energy efficiency standards (MEES) for England and Wales.

These regulations make it unlawful for landlords to grant a new lease of properties that have an energy performance certificate (EPC) rating below E, from 1 April 2018. The regulations do not affect sales. 
 
The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty of up to £4,000 will be imposed for breaches. 

What will the regulations mean for landlords and tenants? 

More control of energy bills and warmer homes

Up to 1 million domestic tenants in the private rented sector may be helped by the regulations, which is likely to grow over time as people move from property to property. The regulations are another way Government is helping consumers take control of energy bills and have warmer, more energy efficient homes.   

Tackling fuel poverty 

Improving the energy efficiency of domestic privately rented property is important in tackling fuel poverty.  Fuel poor households privately renting an F or G EPC rated home would need, on average, to spend around £1,000 more per year on energy to heat their homes properly compared to typical homes. This compares to around £390 for those in EPC bands E and above.  

More energy efficient properties

Investing in their properties will benefit landlords as they will own more energy efficient properties that should be warmer and more attractive to tenants.  

Landlords will be required by law to have improved the energy efficiency rating of the properties they let to at least a Band E from April 2018. However, there should be no upfront costs for them to do this, and the regulations provide safeguards to ensure this is the case.   

Funding improvements

There are a range of funding and financing options, such as Energy Company Obligation and the Green Deal that will help support residential landlords and tenants make improvements before the regulations apply.  Landlords and tenants can find out if they are already eligible for Government support schemes, such as the ECO, by contacting the Energy Saving Advice Service (ESAS) on 0300 123 1234 or visiting www.gov.uk/greendeal.    

What’s more, from April 2016, tenants will be able to request consent from their landlord to make the property they rent more comfortable, and easier and cheaper to keep warm, and the landlord cannot unreasonably refuse.

Prohibition on letting

A domestic private rented sector property is substandard if the EPC rating is F or G, unless an exemption applies. The legislation prohibits a landlord from letting out a substandard property. If there is an EPC in place which shows that the property is an F or G then it must not be let; otherwise the landlord is liable to penalties. This is subject to any available exemptions. 

Energy efficiency improvements must be carried out to bring the property up to an E rating at the minimum, unless one of the exemptions is applicable. In particular, if the work cannot be carried out so as to meet the Green Deal Golden Rule then there is potentially an exemption. Under the Golden Rule there should be no upfront costs (or any net cost to the landlord) because savings resulting from the works should repay their cost over the expected lifetime of the works.

If a landlord lets and continues to let the property in breach of the regulations, however, the breach does not affect the validity or legality of the tenancy itself, so the rent still continues to be payable.

YOUR AGENT comment.

As qualified Energy assessors (both domestic and commercial)  we will work together with all our landlord clients to ensure they are fully compliant with this change in legislation.

Help to Buy ISA deals unveiled

Banks and building societies are offering returns ranging from 0.7% up to 4% on savings in the Help to Buy ISA.

What’s the latest?
First-time buyers saving for a deposit can earn tax-free interest of up to 4% following the launch today of the Help to Buy ISA.

Banks and building societies are still unveiling their rates for the product. But those who have already published them are offering returns ranging from 0.7% to 4%, while the Government will also add a bonus of up to £3,000.

The leading rate for the product will enable people saving to get onto the property ladder to accumulate a £17,500 deposit over five years by setting aside just £200 a month.

Why is this happening?
The scheme is the Government’s flagship initiative to help people who are struggling to get onto the property ladder save money for a deposit.

With the average home now costing more than £186,000, and mortgage lenders still demanding significant deposits, many potential buyers face an uphill struggle to set aside the money required to purchase a property.

The Help to Buy ISA aims to make it easier for people to save the deposit they need.

Who does it affect?
Help to Buy ISAs are obviously good news for first-time buyers. Like conventional ISAs, any interest earned on the money is tax-free.

Potential buyers can save up to £12,000 through the Help to Buy ISA, and the Government will top this up with £50 for every £200 they have saved – the equivalent of a £3,000 bonus.

As a result, people saving as a couple will be able to set aside £24,000 and receive a further £6,000 from the Government, giving them a total deposit of £30,000.

The accounts can be opened by anyone over 16, as long as they have not previously owned a property.

Prime Minister David Cameron said: "My message is clear – if you’re working hard and saving for the future, I don’t just want you to have a roof over your head – I want you to have a roof of your own.

"Thanks to our strong economy and steps this government has already taken, over 230,000 more people have become homeowners since 2010. I want to go further and turn generation rent into generation buy – and today’s announcement is another clear step in us delivering on that commitment."

Sounds interesting. What’s the background?
It is early days for the Help to Buy ISA. Up to 14 banks and building societies will offer the product, but they are still announcing their rates.

Halifax currently leads the field, offering a variable interest rate of 4% on the product. The group claims this return, combined with the Government bonus, will give savers who set aside the maximum £1,200 in the first month and £200 a month thereafter a total of £17,500 after five years. 

And at the other end of the spectrum, Clydesdale Bank and Yorkshire Bank are each offering a rate of 0.7%.

Here are banks and building societies' variable rates on Help to Buy ISA so far:

• Halifax: 4%
• Virgin Money: 3%
• Barclays: 2.27% (available from December 17, 2015)
• Aldermore: 2%
• Bank of Scotland: 2%
• HSBC: 2%
• Lloyds Bank: 2%
• Nationwide Building Society: 2% (it offers up to £1,750 cashback for first-time buyers accessing its Save to Buy mortgage range)
• NatWest: 2%
• Newcastle Building Society: 1.51% (rate includes a 1% bonus on the condition that you make a deposit each and every month)
• Santander: 1.5% (and 2% for 123 World and Select customers)
• Clydesdale Bank: 0.7%
• Yorkshire Bank: 0.7%

Given that the accounts are more akin to regular savings accounts, hpes were for rates closer to some of the very high rates currently available on standard regular saving accounts, to reflect the small amounts being saved. Halifax could well clean up with its market leading 4% rate – double what the majority are currently offering

Having said this, the interest rate is really the icing on the cake. A generous 25% bonus is a great incentive for those who are struggling to find the money to save for a deposit.

Are You Prepared for Right-to-Rent Day?

The UK government has confirmed that all landlords in England will have to check new tenants have the right to live in the UK before renting out their property from February next year.

 
It means that the pilot study on immigration checks which has been ongoing in the West Midlands will now be rolled out across England from February and in other parts of the country at a date yet to be announced.

Under the new rules, landlords who fail to check a potential tenant’s Right to Rent will face penalties of up to £3,000 per tenant.

The Government says that the scheme has been designed to make it straightforward for people to show evidence of their right to rent and a range of commonly available documents can be used, including a UK passport, a European Economic Area passport or identity card, a permanent residence card or travel document showing indefinite leave to remain, a Home Office immigration status document and a certificate of registration or naturalisation as a British citizen.

The checks should be carried out on all new tenants and are backed up by codes of practice, including guidance on avoiding unlawful discrimination, which was drawn up with the assistance of the Human Rights Commission.

Landlords need to check which adult tenants will live in the property as their only or main home and ask tenants for the original documents that show they have the right to be in the UK.

They then need to check the documents are valid with the tenant present, make and keep copies of the documents and record the date the check was made. If a potential tenant has an outstanding immigration application or appeal with the Home Office, landlords can conduct a check on that person’s ‘right to rent’ via the Landlords’ Checking Service.

The Immigration Bill, which is currently passing through Parliament, is likely to introduce even more stringent rules and it will be made it easier and quicker for landlords to evict illegal tenants if they lose their rights or they have no rights to remain in the UK. 

It will also make it a criminal offence to let to illegals, so that so called “rogue landlords” who repeatedly fail to carry out checks and rent to illegals will face not only a criminal record but they will be placed on a blacklist which will prevent them operating a landlording or letting business in the future.


YOUR AGENT will ensure all our landlord clients are fully compliant with the new legislation.

If you are a landlord who does not want to go through this onerous process then why not let YOUR AGENT be your agent? And let us take the hassle out of managing your property.