2020 The Year of the Eco Rental

Written by
Tahir Farooqui
CEO & Founder
Landlords
March 18, 2020

Landlords have a matter of days to ensure their rental property meets new minimum energy standards. As of 1st April 2020, all properties in the private rental sector will need to have an EPC (Energy Performance Certificate)rating of at least an E.

In fact, after 1st April it will become illegal for landlords to let a property if the EPC rating is F or G,unless there is an exemption certificate. After the deadline, a letting agent or property manager can lawfully refuse to market a property that doesn’t conform and any breach of the new requirement may end with a civil penalty of up to £4,000.  

Does the new rule apply to my current tenancy?

In short, yes. The new EPC requirement was introduced in 2018 but it only applied to brand new and renewing tenancies. From 1st April 2020, however, every property in the private rental sector will need to comply – even those that are in the middle of a tenancy. It’s also worth noting that an EPC only lasts for 10 years, so check the renewal and your last EPC rating in light of any changes you may need to make.

How much should landlords spend on making improvements?

Upgrading under performing properties is expected to cost an average of £1,200 per property and is estimated to affect 290,000 buy-to-lets - around 6% of the overall private rental market.

The Government isn’t expecting landlords to spend hundreds of thousands of pounds on improving a buy-to-let’s eco credentials and has therefore imposed a personal spending cap of £3,500 per property. Landlords who need to spend more than this to achieve an E rating may qualify for an entry on the EPC exemption register.

Ways to improve an EPC rating

Consider making the following alternations,as these are the features that an energy assessor will be looking at. Landlords should be mindful that they need to give tenants 24 hours’ notice before they gain access to carry out an inspection or make improvements:-

·      Ensure all windows are double glazed to reduce draughts and retain heat

·       Replace the boiler with a more energy efficient model

·       Swap all light bulbs to energy saving versions

·       Install smart heating controls and radiator thermostats

·       Insulate any hot water tank and pipes

·       Lay loft insulation of at least 270mm thick

·      Investigate the option of cavity wall insulation

Eco improvements actually attract tenants

While making your rental property more energy efficient may require extra investment and time, there is a bonus. A survey by Your Move in 2018 found 42% of tenants questioned considered the environmental impact of a building when making a rental decision.

In addition, the research found half of all tenants in London believe landlords should give consideration to the eco aspect of their property and undertake measures to ensure that it is environmentally friendly. Aiming to surpass the mandatory E rating may actually result in more renters expressing an interest in your property.

Make the most of the green advantage

While the minimum E rating sounds like another hoop for landlords to jump through, it does give the private rental sector an eco advantage over the owner-occupier market. Currently there is no requirement for live-in homeowners to meet a minimum EPC rating – why not use this to your advantage when marketing a rental property?

Disclosure warning: displaying an EPC rating

Landlords should be aware that the EPC rating attached to their let must lawfully appear as a letter (D, for example) on any lettings listing or advert published in the commercial media. In addition, landlords cannot show any prospective renters a property, nor can they share any written information, until an EPC is available.

Minimum standards may rise further

Landlords whose rental properties have a current E rating are being advised not to rest on their laurels as the Government has pledged to continue improving energy standards in the private rental sector. It has been reported that mandatory minimum EPC requirements may rise to D by 2025 and to C by 2030, although this has not been confirmed.

 

Get Canopy in your inbox

Sign up to our emails for updates, product releases, and tips to make you financially resilient.