From 1 April 2018, assured shorthold landlords will not be able to validly enter into a new tenancy, or renew an existing tenancy, unless the energy performance rating for the property to be let is rated at Grade E or above.
There will be fines of up to £4,000 for landlords, found to be in breach of the legislation, or who let properties with an energy performance rating of F or G.
This change will not affect any existing tenancies – yet. However, in April 2020 the requirement will be extended to all existing tenancies; which means any property that is let will have to have a minimum energy efficiency rating of E (unless it is exempt).
When a fixed term expires, and the agreement is silent as to what happens upon that expiry, the tenancy will become a statutory periodic tenancy. Statutory periodic tenancies are treated as new tenancy agreements, and therefore the new rules will apply to them. If however the agreement expressly creates a periodic tenancy at the conclusion of the fixed term, then it is a contractual periodic tenancy agreement (in other words, no new tenancy agreement has been created upon expiry of the fixed term) and in that case, the new rules do not apply.
There are some exceptions to these new rules (such as if the required improvements will cause damage or reduce the value of the property by 5% or more), but they will only apply in a small number of cases.
If the rating for your property falls below a Grade E then there are numerous measures you can carry out to the property to improve the grade. The first thing you should do is consider the recommended measures contained within the Energy Performance Certificate (‘EPC’).
The top five recommendations given by assessors for improving energy efficiency have been:
- Loft installation
- Cavity wall insulation
- Using low energy lighting
- Using thermostatic valves on radiators
- Installing double glazed windows
The government’s guidance is extensive and can be found here.
All tenants must be provided with a copy of an EPC within 7 days of the tenancy commencing, failing which the landlord is at risk of a financial penalty. In order to serve notice under Section 21 of the Housing Act 1988 with a view to recovering possession of an assured shorthold tenanted property, a landlord must have provided the tenant with an EPC. Some tenants, whether accurately or not, allege that they have not received a copy of the EPC. For certainty, we recommend that landlords keep proof of when the EPC is provided, particularly by requesting the tenant to sign a statement confirming they have received it.