After what seemed to be an eternity of uncertainty, the 2018 EPC regulation changes have been finalised.
From the 1st April 2018, there will be a requirement for any properties rented out in the private rented sector to normally have an energy performance rating of E or above on an Energy Performance Certificate (EPC). The regulations will come into force for new lets and renewals of tenancies from 1st April 2018 and for all existing tenancies on 1st April 2020. Any property that is rented out which breaches the requirement for a minimum E rating will be unlawful and could face a civil penalty of up to £5,000 unless there is an applicable exemption.
Please watch the video below for the RENT SMART WALES video on EPCs
1. The regulations surrounding Energy Performance Certificates are changing on 1 April 2018
This has been a long-standing concern of the industry with uncertainty amongst agents, landlords, tenants and energy assessors as to when these changes would come into effect and just what the implications of these changes would mean for all of those involved. The date is set for 1st April 2018.
2. The EPC changes affect both residential and commercial property in the Private Rented Sector
As expected, these new Minimum Energy Efficiency Standards (MEES) will apply to both the domestic and non-domestic sides of the PRS meaning that whether a landlord is letting out a commercial property or a house to a tenant, it could be unlawful to do so should the building not meet these new minimum EPC requirements.
3. The Minimum Energy Efficiency Standard for non-domestic (commercial) buildings is an EPC rating of E
It is our understanding that this new rating will be based on C02 emissions for commercial property, this is the EPC graph displayed on the first page of the commercial energy efficiency certificate. Read the official DECC Government report for Non-Domestic buildings here.
4. The Minimum Energy Efficiency Standard for domestic (residential) buildings is an EPC rating of E
It is our understanding that this new rating will be based on Fuel costs rather than C02 emissions for domestic property. This is the EPC graph displayed on the first page of the energy certificate. Read the official DECC Government report for Domestic dwellings here.
5. The EPC regulation changes are about the energy efficiency rating and that, if renting out a property, an F or G rating could be problematic.
Potential issues could arise after 1 April 2018 when trying to let a house/flat or renew a commercial lease with an EPC rating worse than an E.
For the period Q1 2008 – Q1 2015, 35% of Non-Domestic buildings which had an EPC survey carried out were achieving an E, F, or G rating. For the same period, 26% of Domestic properties achieved an E, F or G rating. This official Government data suggests that a significant proportion of the UK building stock could be affected by the new energy performance regulations.
6. These new Minimum Energy Efficiency Standards (MEES) were released by the Department of Energy and Climate Change on 22nd July 2014 and confirmed on 5 February 2015.
The Government considered the views of a variety of individuals and organisations across England and Wales on the issues surrounding EPCs before deciding on the details of the new regulations which are designed to help the Government meet their obligations set out in the Energy Act 2011 to improve the energy efficiency of property within the privately rented sector.
7. The new EPC regulations require eligible properties to be improved to acheive a rating of E or better, before they can be rented out
The new regulations apply to Non-domestic property, defined by the Energy Act 2011 as any property let on a tenancy, which is not a dwelling. All commercial property types from A1 – D2 usage class are in scope of the regulations, with the exception of those exempt from existing Energy Performance Certificate (EPC) regulations.
The regulations apply to Domestic property, defined in section 42 of the Energy Act 2011 as properties let under an assured tenancy for the purposes of the Housing Act 1998, or a tenancy which is a regulated tenancy for the purposes of the Rent Act 1977. There are also however, some exceptions where a domestic property would be exempt from requiring an EPC.