The Private rented sector and Energy Efficiency Regulations

For a long time now, there has been a legal requirement to commission an Energy Performance Certificate (EPC) before a residential property is put on the market and to give a copy of the EPC to a buyer before the Property is sold. There is no similar requirement for the letting of residential property. However, the Government is proposing to make changes.

The Government is obliged to bring into force regulations to improve the energy efficiency of buildings in the domestic private rented sector. The domestic private rented sector represents 18% of the housing stock and has the highest percentage of buildings in the least energy efficient sector – those with an F or G EPC rating. The Government is determined to address this.

The Government intends to launch two initiatives.

Tenant improvements

The Government proposes regulations which will empower tenants in the domestic private rented sector to request consent from a landlord for energy efficiency measures, and such consent may not be unreasonably refused by the landlord. At present, the landlord may simply refuse permission for any energy efficient improvements.

The Government is consulting on
· Which tenants may make a request
· The terms of the request
· The process of making a request
· How a landlord should respond
· Where a landlord may reasonably refuse a consent and
· What would happen if there is a dispute

It is proposed the landlord may refuse consent where it is reasonable to do so. It is proposed there will be a number of situations where it will automatically be reasonable to refuse consent. For example where

· the landlord has his own proposals
· the measure would involve the landlord incurring upfront costs
· the tenant is proposing to change fuel from gas to electricity (or vice versa) and it is not cost effective
· planning permission is required but has been refused
· a third party consent is required (e.g. a superior landlord) and the consent has not been obtained
· the measures would adversely affect the value of the building.

It is proposed a tenant will be able to request consent for energy efficient measures to their landlord from 1 April 2016.

Minimum standard regulations

The Government proposes to set a minimum standards for domestic private rented properties at an EPC rating of ‘E’.

Properties below this standard must install energy efficiency measures before they can be rented out.

A landlord would be able to let a property below the minimum ‘E’ standard where

· the landlord has undertaken certain Green Deal works but the minimum ‘E’ rating has still not been achieved (this is designed to ensure the landlord need only undertake works which could be carried out at no net or upfront cost)
· planning permission is required for energy efficiency measures but has been refused
· a third party consent is required (e.g. a superior landlord) and the consent has not been obtained
· the measures would adversely affect the value of the building.

It is proposed the minimum standard regulations will apply to new domestic private rented properties from 1 April 2018, and there will be an application to all such dwellings from 1 April 2020. It is anticipated local authorities will be the enforcement bodies for the minimum standard regulations and with powers to issue fines and penalty rulings.

It is not intended, however, that these minimum standard regulations will apply to the buying and selling of dwellings.