HMO landlords brace for chaos as EPC rules could tighten

Changes to the EPC system could cause chaos for HMO landlords and short-term lets.

Proposals in the EPC consultation suggest that HMO landlords may be required to have a valid EPC for the entire property, even when only a single room is rented out.

Currently, an EPC is only required for an HMO when the whole house is rented out.

Valid EPC will help tenants

In the third series of articles about the EPC consultation, we delve into what the proposals could mean for HMOs and short-term lets.

The consultation says requiring HMOs to have an EPC will provide consistency across the private rented sector.

The consultation states: “The private rented sector minimum energy efficiency standard (MEES) regulations apply to most domestic rental properties which are required to have an EPC.

“Mandating EPCs for HMOs when a single room is rented out will ensure that HMOs will need to comply with the requirements set out in the MEES Regulations if they did not have a valid EPC before this point.

“A valid EPC for an HMO when a room is rented out would ensure that a prospective HMO tenant could make informed decisions based on the energy performance of the building and an indication of potential energy costs.”

The consultation claims that requiring landlords to obtain EPCs for HMOs, will improve living conditions for tenants.

The consultation says: “As HMOs are disproportionately occupied by vulnerable people, we anticipate that these measures will help ensure that tenants are living in thermally comfortable properties, with reduced costs during a time of high fuel poverty.”

Many HMOs are typically Victorian buildings that have been converted into self-contained units, changing the rules on EPCs could make it harder for landlords to make the necessary upgrades to their property.

EPC throughout a tenancy

The EPC consultation also reveals if the government plans to introduce a requirement for an EPC throughout the tenancy, then an HMO will need to expand EPC requirements.

The consultation says: “For HMOs where there are often multiple separate tenancies running concurrently for a single property, this change will require an EPC to be in place at the point of marketing for the first letting, up to and including the date the final letting comes to an end.”

However, the consultation makes no mention of the changes in the Renters’ Rights Bill where all tenancies will become periodic and does not list any details on how this will align with the changes in EPCs.

The government says if the proposals come into force then HMO landlords will be given a 24 month transitional period to obtain a valid EPC.

EPCs for short-term rentals

For short-term rentals, the government says the current guidance only requires an EPC for furnished holiday lets.

The consultation states: “There are no specific requirements set out in the Energy Performance of Buildings (EPB) regulations themselves.

“The current guidance states that an EPC is only required for properties rented out as a furnished holiday let, as defined by HMRC, where the building is occupied for the purposes of a holiday as a result of a short-term letting arrangement of less than 31 days to each tenant, and is rented out for a combined total of four months or more in any 12-month period, and if the occupier is responsible for meeting the energy costs for the property.”

The government says: “The Ministry of Housing, Communities and Local Government is working with the Department for Culture, Media and Sport (DCMS) to ensure that the definition of short-term rental property within the regulations aligns with DCMS’s definition of a short-term rental property.”

The government is now proposing to update the regulations to explicitly require short-term rental properties to have a valid EPC when they are let. This requirement will apply regardless of whether the occupier is responsible for meeting the energy costs.