An EPC is valid for ten years and in that time the assessment, results and recommendations can change. It is now well known that a valid EPC is needed for the letting of a property.
However, with any legislation there is always uncertainty and further explanation is needed. One of the questions that has cropped up regularly from both landlords and tenants is “do I need to renew an EPC during a tenancy?”
What is an energy performance certificate?
An EPC assesses the energy performance of a property, from “A” representing the most energy efficient property to “G” representing the least energy efficient property.
The Energy Performance Certificate has been with us since 2007 and is gathering power as time moves on towards the targets that the Government has set, which is to be carbon neutral by 2050.
Do I need to renew an EPC during a tenancy?
Owners will only need to obtain a new energy performance certificate for their rental property every ten years. However, it is likely that over this decade new innovations in efficiency and the expected wear and deterioration of the rental could mean that a property that reached the MEES on its last inspection, could fall short of the mark ten years on.
With this being said, providing that the rental property achieved an EPC rating of an E or above, the certification is valid over the usual period, regardless of if this is during a tenancy. However, do landlords need to renew their EPC if it expired during a tenancy. Simply put no, the limitations are placed on advertising the property to new tenants, therefore landlords can obtain a new certificate once their existing fixed term has come to an end.
EPC Regulations 2007
The 2007 Regulations require an EPC on the grant of a lease. The guidance further states that the purpose of providing an EPC is for a prospective tenant to consider the energy performance of the property.
It is therefore reasonable to conclude that a “prospective tenant” does not include a person who is already a tenant. This makes sense in the context of the EPC regime, as the renewing tenant should already know about the building’s energy performance of the property. An EPC would serve no real purpose in those circumstances and having to provide one would be a waste of time and money.
However, the MEES Regulations provide information only when there is a valid EPC currently in place as a result of the EPC regulations applying.
MEES Regulations on non-domestic dwellings
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 established a minimum level of energy efficiency (MEES Regulations) for privately rented property in England and Wales. The Mees Regulations came into force on 1 April 2018.
It states that the landlord will only be required to obtain a new EPC if they intend to re-let the property (to the current tenant, or to a new tenant) once the current lease expires, or if they (or their tenant) modify the property in a manner which would require a new EPC. So for non-domestic properties the guidance is clear and an EPC is required on the renewal of a lease, if there was a valid EPC previously. However, oddly the MEES Regulations for domestic dwellings differ.
MEES Regulations on domestic dwellings (March 2019 version)
The regulations state that; the landlord will only be required to obtain a new EPC (which will trigger a need to comply with the minimum energy efficiency provisions) if they intend to remarket the property for let once the current tenancy expires, or if they (or their tenant) modify the property in a manner which would require a new EPC to be obtained. It is not exactly clear on how we are to interpret this, although it seems likely that a landlord would not remarket the property for let if a new lease were being granted to the current tenant.
Therefore you need to distinguish between domestic and non-domestic property on the question of whether an EPC is needed on a lease renewal.
Is It illegal to let a property without an EPC?
Any property that has been rented to tenants since 2008 has been required to produce an Energy Performance Certificate. As mentioned briefly mentioned above, a landlord is unable to advertise their rental property to tenants unless their property has an EPC rating of “E” or above, preventing them from begging a new tenancy unless their rental meets Minimum Energy Efficiency Standards, but more on that later.
If a landlord is found to be renting out their buy to let property whilst it has an invalid EPC or the property didn’t satisfy the minimum criteria of the efficiency assessment, the local authority can take action. If notified by a tenant, or if found through internal investigations, officers from trading standards can demand that a landlord produce a valid EPC for the rental. If the property owner is unable to provide the requested documentation within 7 days, they are liable to pay a penalty charge.
Additionally, landlords are legally required to issue each new tenant with a range of new documentation before they move into the rental property, with one of these being an EPC. If upon signing a new tenancy agreement and commencing a tenancy period the tenants have not been issued with a valid EPC for the appropriate property, a fixed penalty of 12.5% of the building’s rateable value will be charged, with a fee of £750 being issued to the landlord if this cannot be applied. Whilst the penalties that can be issued to landlords for breaching these regulations is capped at £5,000, if the landlord continually fails to provide an EPC to a enforcement officer from the local authority, another fine of £200 will be issued.
Problems with lending with a low EPC banding?
Many of us are aware that the EPC is needed for the sale or the rental of a property, although there are occasions when one party can overlook having a valid certificate and an EPC is needed in a hurry.
A valid EPC is also needed when further borrowing is being considered by a property owner, which is a situation that I have seen crop up on numerous occasions. What I have not encountered is the effect upon the additional advance, has it been declined or maybe at a less favourable APR?
If you are considering a buy to let option, consider this also, your mortgage broker may not advance you the loan that you are seeking if the EPC of the property is a low grade. You may also find that if you are granted the loan that you need for your buy to let, your offer may be at a less favourable rate for a property that is less energy efficient.
In our experience?
There may be some tenants who are not too concerned about the property that they are renting and could be seen as easy targets by some unscrupulous landlords who may provide a poorly performing property where heat emission, heat retention and cost of providing energy efficiency in the height of winter becomes critically expensive and the property can become unbearably hot during the summer months.
Good insulation is good for you, your property and your wallet throughout the year and all seasons.
One of the goals of the EPC is to reduce, hopefully eliminate fuel poverty, we know that there are countless families in the country who are struggling with their fuel bills, time and time again we hear the phrase “do I eat, or do I heat”. This surely cannot be right?
If you are going into a tenancy, your landlord needs to provide you with a valid Energy Performance Certificate, if you are not sure about some of the content, you can contact Summit Environmental, we will explain the EPC in as much detail as possible.
With any legislation there are always grey areas which can create uncertainty and need further exploration. One of the questions that has cropped up several times and both from landlords and tenants is this, “I am renewing the tenancy, the same occupants, do I need to have an EPC completed?”
We can see some very good reasons for doing so and therefore the answer must be yes, if a tenant is extending their lease there should be an EPC in place which is current.
The current proposal is that in 2025 all new tenancies must have a certification no lower than band C and from 2028 all existing rental property must also reach that band C target, which may become a huge headache for landlords and potentially a very expensive one.
In addition to this information existing EPC’ s ratings and recommendations, as stated previously begin to become less valid. For example, fibre insulation compresses over time and becomes less efficient. For example, fibre loft insulation which was to a depth of 150mm. Ten years ago may now measure 125mm due to compression. In the same way double glazing ages, on many assessments the rating for pre 2002 double glazing the assessment is seen as average, due to materials used, glazing gap and them still being sealed units.
The benefits of a good EPC?
The benefit to the landlord is this, that if you are offering an energy efficient property, you are seen not only in a good light and one who looks after his residents but also one who can attract a good price for his property, which would also be a more desirable property for rental.
The benefit to the tenant or resident, may be that this property may be slightly more expensive initially but over the course of time that you are likely to be there, the home will be warmer and more comfortable for you and your family, avoiding damp through condensation, avoiding potential health issues and obviously fuel bills should be lower.
Need assistance with EPC’s in Sussex, Kent or Surrey, advice on the EPC Regulations, how to improve your EPC rating contact us on firstname.lastname@example.org