What do April ’12 changes to EPC’s mean to us as landlords?

by Mary Latham

12:23 PM, 5th March 2012
About 7 years ago

What do April ’12 changes to EPC’s mean to us as landlords?

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What do April ’12 changes to EPC’s mean to us as landlords?

Landlords EPCFor those who think “More legislation to make life difficult for landlords” let’s first look at why Government need us to have Energy Performance Certificates (EPC’s).

When fossil fuels are used they emit carbon dioxide (CO2), which is known as a “greenhouse gas” (GHG) because it helps produce something called the greenhouse effect. This traps UV rays from sunlight in our atmosphere bouncing them back and forth from our atmosphere to the ground heating up the earth, increasing global warming. Climate change is one of the major challenges facing everyone on this planet and GHG emissions are recognised to be responsible for this change. Every country in the world must play its part in reducing carbon emissions and each country must identify ways that they can do this.

UK Government had no statistic upon which to base its future plans and, in October 2008, the EPC was born in order to gather accurate information and to raise awareness of the amount of fuel that was being used.

This is the timescale for the future of EPCs in relation to letting property

  • From 6th April 2012 a new style certificate will be used
  • From 2016 a tenant will be entitled to ask the landlord to carry out the measure recommended on the EPC and the landlord will have a legal obligation to do so
  • From 2018 it will be illegal to let a property which has an EPC rating below E

Let’s look at what landlords, because we are the “relevant person”, and Agents acting on our behalf, need to do in order to comply with our legal obligations under the Energy Act of 2011 and changes to The Energy Performance Of Buildings (Certificates And Inspections) (England And Wales) Regulations 2007 (The EPB Regulations).

1. We must all have an EPC assessment carried out on any property that we are going to offer for let or sale this must be commission before we begin to market the property the onus to do this remains on the ‘relevant person’ (the seller or landlord).

2. We must show every prospective tenant the EPC at the viewing to enable them to assess the cost of fuel that they will use if they take the property.

3. We must give a copy of the EPC to each tenant at the start of the tenancy so that they have a permanent record to keep.

4. Before 2016 we should all carry out measures recommended by the assessor on the EPC and have the property re-assessed and re-rated to show that we have done so, this is not a legal requirement but it will enable us to have work carried out as part of planned maintenance and when the property is unoccupied if we choose to do so.

5. By 2016 we must be prepared to carry out any outstanding measures if the tenant requests us to do so and there is a finance package available because this will be a legal requirement.

6.  By 2018 it will be illegal to offer a property to let (or for sale) unless we have raised the EPC rating to E or above or above if it is possible to do so according to the Energy Assessors recommendations on the EPC.

7.  It is recognised that there are some properties that will not reach an E rating and the Energy Assessor will note this on the EPC and a note of the highest possible rating will also appear.

As long as we comply with all the recommendations on the EPC it will be legal to let properties that cannot be brought up to the minimum standard. The new rating will be noted on the revised EPC and a potential tenant will be therefore be aware that the property may be expensive to heat – this may
have an impact on a landlords ability to let the property as more tenants become sensitive to fuel costs.

8.  At the moment there are many free and low cost measures being offered to landlords and tenants, including insulation for single brick buildings, and we should all explore what is available to us before they are withdrawn when Green Deal replaces them. A phone call to the Energy Saving Trust is all it takes to find out what is available in your area.

9. Green Deal is a scheme to help us to improve the energy efficiency of our properties at no cost. I will write another piece on the details of Green Deal in the coming weeks and I will tell you the benefits of using this scheme and the issues that are concerning landlords. There are many Chinese
whispers about Green Deal so it is important that landlord understand the facts in order for us to make commercial decisions.

10. EPCs carried out before 6th April 2012 will continue to be valid until their expiry date. The new style EPC will be used from April 2012 will have

  • a single energy efficiency graph on the front page;
  • significantly reduced text;
  • clear signposting to the Green Deal;
  • an indication of which recommendations could be funded through the Green Deal;
  • greater focus on potential financial savings;
  • recommended improvements nearer the front of the document;
  • text of less immediate interest moved to the back page.

11. Those who carry out the EPC assessment will need to be re-accredited before 6th April in order for the EPC to be valid and landlords will need to ensure that their Assessorhas that new qualification.

12. The duty to commission an EPC before marketing will be extended to the sale and rent of residential and non-residential buildings.

13. The current 28 day period within which an EPC is to be secured using ‘reasonable efforts’ will be reduced to 7 days;

If after that 7 day period the EPC has not been secured the ‘relevant person’ will have a further 21 days in which to do so.

14. Trading Standards Officers (TSOs) currently have the power to require the ‘relevant person’ to produce copies of the EPC for inspection and to take copies if necessary. The power to require the production of documents will be extended to include persons acting on behalf of the seller or landlord – estate agents and letting agents. This means, for example, that TSOs will be authorised to require agents to produce evidence showing that an EPC has been commissioned where they are marketing a property without one.

This amendment is intended to remove the erroneous belief that the provision of the EPC can be delayed until shortly before the parties enter into a contract for sale or rent. This will be achieved by deleting the words “before entering into a contract to sell or rent the building or, if sooner” in Regulation 5(2)(b) of the EPB Regulations.

15. Currently, for residential sales only, the ‘relevant person’ or his agent is under a duty to either attach the EPC to written particulars or include the asset rating on those particulars. The amendments will require the EPC to be attached to written particulars in relation to buildings sold or rented out. The option to include the asset rating will no longer apply.

The existing definition of ‘written particulars’ will be expanded to ensure that particulars produced for rented buildings and commercial properties are captured by the new requirements. The requirement will only extend to the first page of the EPC (the EPC consists of two pages, accompanied by four pages of recommendations)

16. As an exception to this requirement, provision is made to allow the person subject to the duty to provide the written particulars to omit the address of the building from a copy of the EPC
where the address has been omitted from those particulars.

17. The requirement to lodge air conditioning inspection reports on the central Non Domestic EPC Register will become a statutory requirement, replacing the current voluntary approach.



Comments

Mark Reynolds

21:43 PM, 5th March 2012
About 7 years ago

Thanks Mary - Despite us being aware of the new regulations you have, as always, put them into context and easy to understand for many landlords.

It is also comforting to know that letting agents are a step closer to being regulated and also landlords will have a legal obligation to carry out the remedial work to bring the property up to standard. My only concern is how will this be enforced?

I recently spoke to a friend of mine who had cause to take an estate agent to the TSO. After months of investigation, only 1 part of their 5 phase complaint was upheld. The TSO imposed a "proportionate sanction" which related to the agent advertising that they were part of the TPOS as a full member when in fact they were not. The agent continues to display the logo's despite the TSO being informed. So my point is this. Will the TSO be able to enforce the new rules if they are flagrantly flouted? I would guess that given the huge cut backs in the public sector they simply will not be able to "regulate" the smaller landlord/letting agent and they will be able to get way with it.

I have a huge respect for you Mary and I really enjoy reading your articles. Keep them coming because with every article you write comes a common sense approach to the minefield of letting a property. 🙂

Mary Latham

22:12 PM, 5th March 2012
About 7 years ago

There will no doubt be more sharing of information in future.  Properties are not easy to hide and the records show which have an EPC registered.  Over time as properties are marketed for sale they will show up on the radar.  In a much shorter time scale rented property will also show up on the radar.

Just think of the records that could be accessed.
LHA payments
Council Tax
Utility companies
Electoral regiser
Schools pupils homes address
Colleges ditto
Universities ditto
Driving licenses
Passports
Employers
etc etc etc

Its not difficult it just needs a tweek of legislation and many problems would be solved for those who wish to regulate the PRS landlords might be invisible but properties are not

kevin Callaghan

20:18 PM, 6th March 2012
About 7 years ago

Thanks for article on EPCs Mary.
I have several shared houses and pay all the bills for the properties and naturally I have taken every messure I can to insulate and reduce energy wastage.  None of my properties have been unoccupied for five years.  Do these new regulations apply to my situation as I would in effect be producing this meaningless piece of paper for myself at my own expence?
Any thoughts,
Kevin

Mary Latham

21:57 PM, 6th March 2012
About 7 years ago

Kevin you will not need an EPC until you market the properties.  Landlords will however need an EPC to access Green Deal funding so you might want to think about it at that point.

Brilliant that you have done so much work to reduce your bills and obivously your tenants feel happy and comfortable to have stayed with you for so long.  Well done  for being a good landlord regardless of legal requirements

11:02 AM, 21st March 2012
About 7 years ago

Hi Mary - are you able to confirm whether HMO's that were previously exempt from EPC's will need them under the new regulations?  I pay the bills at my HMO's and have all of my properties insulated to current recommended standards and many houses with solar panels on the roof too so I'll probably have no problem getting an EPC, but I need to know whether I need to go the expense of getting a certificate. Thanks

Tony Atkins

8:05 AM, 3rd April 2012
About 7 years ago

Thanks for this article Mary. Do you know why these measures aren't being imposed on homeowners as well, to the same extent and timeframe? After all, rented properties are only a small percentage of the housing stock and homeowners are contributing much more than tenants to global warming.

It will be interesting to read your article about the Green Deal, because if some of the rumours I've read are true, the full cost of the works will be paid by the Government and added to the building's future utility bills, meaning the tenants will be paying, not the landlord.

I regret however that many energy-efficiency measures aren't worth the bother. The NHBC, for example, recently published a study showing huge variations in the energy use in improved properties, largely due to user behaviour (see report NF38 at http://www.nhbcfoundation.org under "Research and publications"). The perception that a house was "energy efficient" even contributed to an overall increase in energy use, because people increased the ambient temperature, left lights on more, or found the controls too complicated and fussy to use.

As regards the works I've had done myself, I've found tenants' bills drop only a little, and any savings are outweighed by increased maintenance costs: condensing boilers break down more often than cast-iron ones and are designed to last 7-10 years compared to 25 years, and low-energy lightbulbs need replacing much more often than advertised and are much more expensive than tungsten bulbs. Tenants are horrified when they discover their so-called efficient bulbs cost £3-5 each to replace, and by the cost differential between regular GU45 downlighters and low energy ones. In addition, condensing boilers never show the advertised efficiency savings because they rarely work in condensing mode: they are designed to work at 50-60 degrees C but are usually bolted onto existing hot-water radiator systems which are designed to run at 100+ degrees. Most condensing boilers consequently only work at peak efficiency for about half an hour at startup and cool-down, after which the efficiency falls away. They will only work properly if you install hot-water underfloor heating or replace all your radiators with much larger panels that can accept a lower water temperature but still give the required heat output.

The most cost-effective measure is draught-proofing, though if you do this too well, you will have to pay again to knock holes in your house and install extractor fans, because condensation becomes a major problem. I wonder if extractor fans will be covered by the Green Deal . . . ?

9:24 AM, 3rd April 2012
About 7 years ago

Do HMO's require EPC's

Mary Latham

18:45 PM, 3rd April 2012
About 7 years ago

My understanding is that all property offered for rent must have an EPC at the time of marketing. I am told by and EPC assessor that each  unit would needs its own EPC but you would need to check that out with the person carrying out the assessment, it may depend on the style of the building and how the units are divided

Mary Latham

18:57 PM, 3rd April 2012
About 7 years ago

When the EPC measure were first discussed in Europe the plan was to make 2018 the date at which a property could neither be rented or sold if the EPC was below E..  This would have trapped many landlords who would need to find the funds to raise the EPC whatever they decided to do with the property.  As we know this did not happen but it is only a matter of time and in my opinion it will be a very short time.

The Greed Deal loans will not come from Government but will be provided by organisations that are being set up to offer them. The repayment will be attatched to the electric meter and will therefore be paid by the person who pays the bill.

Interesting to read some of your comments about energy efficient items I have heard others express similar concerns.

I have fitted Humidity controlled extractors to all my kitchens and bathrooms and I think it unlikely that GD will cover these - when we have more details I will post.

Mary Latham

18:58 PM, 3rd April 2012
About 7 years ago

Please see my reply above

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