Property people get ready for new EPC rules

I have been liasing with a company who do accreditation for EPC/Green Deal etc and are on the advisory panel in the consultation of all things related to EPCs etc. I've been told that the next change is moving EPC's to 3 year renewals, down from 10.

There is a raft of legislation coming through which is aimed and mandating energy efficiency improvements, but this will be tied into Green Deal funding.

What I find amazing is the number of rental properties that still have no loft or cavity wall insulation, at least in the Manchester area this can be done for little over £50 given all the grants that are about.   So way are agents not getting tenants on their books to apply for the grants?

(When we were renting a few years ago, the agent was not keen on us getting the free insulation installed, the landlord loved the ideal, but the agent just seem to see it as yet another bit of admin.)

Personality I would like to see it being a legal requirement for a landlord to install loft and cavity insulation provided there is not something about the property that makes it very expensive to do so.

I also don’t understand way there seem to be no relationship between rent levels and running costs, home buyers are about running costs, but tenant seem not to for some reason.

Ian at 2016 all tenants will be able to request landlords to carry out measures like thiis and landlords MUST comply.  By 2018 landlords will not legally be able to let a property where the EPC rating is below E and loft insulation is a quick fix.

I am struggling with the Managing Agents in blocks of flat, because there is nothing in it for them they are not bothering and this will cause landlords major problems in 2016.  As you have said it is really cheap now and all landlords who let flats need to push their Agents to get the work done.  They make enough from the Service charges and there is very little work involved the supply company will do the admin. 

I wonder how many blocks of flats have no loft or cavity wall insulation?

Ian by 2018 ALL rental properties will have to meet EPC Rating A-E.
Any of those that don't will HAVE to be removed from the rental market.
So any LL that has properties that do not met this standard may in October apply for a Green Deal loan to facilitate such works that are required to meet at least the minimum standard.
This loan will be paid back by the tenant via the energy bills.
The advantage of having the works carried out under the Green Deal is that it costs the LL nothing.
However any LL applicant will naturally end up on a govt database.
Advantages of having the work carried out soner rather than later are:-

Enhancement to property value and possibly higher rent due to increased amenity.
£0 cost to LL
Tenants will gravitate to rental property that meets the EPC standard A-E
Having works carried out now will mean no last  minute rush for builders to carry out the works before the 2018 deadline.
Get the loan monies now;  the govt might change it's mind about the loan amounts or carrying on with the scheme at all,  citing no more money available; but you can bet they will still require EPC A-E rating for ALL rental property (One thing I am not sure is if it includes holiday property, I can't see why it would be excluded, perhaps Mary might know)

You have identified a real problem there Mary with flats.
Fortunately mine are new-build so meet the standards.
But for any LL who owns a flat which doesn't meet the A-E EPC rating then as you say if the tenant requests the works in 2016 or the the works are not carried out by 2018 the flat will NOT be able to be used in the rental market.
The ramifications of such are obviously enormous.
Any one looking at buying will if they have carried out DD ascertain whether the management company will be carrying out works.
But you can imagine the default position of a prospective LL purchaser.
They won't bother purchasing a flat which does not meet the EPC A-E rating now.
As they could not rely on a reluctant management company to carry out the works.

I know I am making a dangerously sweeping statement, but as a GENERAL rule, flats don't tend to fall into the F-G ratings due to having less heat loss perimeter. 

Even if a flat is pre 1900 with electric heating, a flat generally has either a heat loss ceiling or floor, but not both. Also, usually at least one wall is either sheltered or party, cutting down the heat loss further.

I can't say 100%, but I can't remember the last time I provided a certificate for a flat which was an F or G (For info, RDSAP is actually a scale from 1 to 100 with 100 being the best. The letter rating is added later, but each letter band is not the same size. For instance band G = 1 - 20 but band A = 92 - 100+. to fall below the acceptable level for 2018, a property would have to be 38 or less.) 

I do agree that landlords would be wise to look into these energy issues sooner rather than later, because once the green deal kicks off you can guarantee it will replace grants... No more cheap insulation.

At risk of overstating the point, landlords might also want to think about the following points together. 1) In order to raise the rating of a property, after October the only funding available will be the Green Deal. 2) Letting agents after April 1st will be obliged to display the front page of the EPC alongside all written details for marketed properties including on line. 3) The front page of the EPC will include information on any green deal that applies to the subject property, including how much is collected per year and for how many years.

Once tenants start to look at these things, I'm guessing they won't want to pay full rents when their meters are going to be collecting £££s off them to pay for their landlords improvements... Might be time to start thinking about how to spin that.

I have a 1904 edwardian house conversion flat - and it's an F! Electric storgage heating and mid-floor so not even got heat loss floor or roof!

In this instance, the green deal will be welcomed - I can get the solid wall insulation done without any cost to myself and the tenants, although they will finance the insulation through their energy bills, will enjoy a more comfortable property! 

Have you any appreciation based on your EPC knowldege what the differentials would be for energy costs.
So an F-G property would cost more in energy costs for a tenant.
With Green Deal improvements and the requirement to pay back the Green Deal loan via increased bills would the costs to the tenant be the same as EPC F-G property,  so that efectively the costs would work  as cost neutral.
Once the Green Deal loan has been paid back then bills would reduce for tenants.
Therefore I don't see Green Deal enhancements mitigating against a tenant choice over a property.

The Green Deal involves something called the golden rule, which basically says that as a minimum the saving created by the improvements must be greater than the repayment amount, so yes the net result is that the tenant will pay the same or less than they would if the improvements were never carried out.

The bit you are missing though is that in a lot of cases, the prospective tenant isn't facing a yes/no choice, more a choice of potential properties. If there are two houses on the same estate, one is collecting £700 a year though the meter for the green deal funding and the one next door was improved without green deal funding, which would you choose? If you really wanted the first one, would you feel justified asking for £60 a month knocked off the rent?

I know these things are never black and white, but it all needs thinking about 🙂

As I said, it was a sweeping statement! I had a quick look back over my reports and could only find one F... A top floor room in roof pre 1900 flat with all four heat loss sides and single glazing (electric storage heating).

As yours is mid floor, can I suggest that either your assessor didn't do the job properly, or you are very unlucky... I don't want to pick on any one in particular, but there has been a lot of anecdotal evidence of assessors spending five minutes in a property, useless site notes, etc. Until now, no one (outside of energy assessors and accreditation schemes) cared how well the job was done, but that's all about to change if the EPC tells you whether you can rent your property out or not!