How energy efficient is your buy-to-let property?

Energy efficiency is no longer an optional extra for landlords. From April 2018, it will be illegal to rent out property with an Energy Performance Certificate (EPC) rating of less than ‘E’.  

Renting out such a property could land you with a fine of up to £4,000, and you will be prohibited from letting the property until it reaches that ‘E’ rating.

Detailed guidelines are coming out in October, but the Residential Landlords Association is advising landlords to take advantage of changes in tenancy to get ahead of the game and make the necessary improvements. 

What you need to do 

Start by getting a fresh EPC so you know how well your property is already performing. You may discover that simple measures will be enough to bring the place up to an ‘E’ rating: renewing door and window seals, installing energy efficient lighting and smart meters, or increasing the depth of attic insulation.  

If the present rating of your property is very low, you may need to undertake more costly alterations - replacing the boiler with an energy-efficient model or installing cavity wall insulation, for example. 

Who pays? 

Joanna Wade, Head of the Association for the Conservation of Energy, suggests that compliance with the legislation will often cost as little as £600. Wade is also looking for government incentives for the implementation of such schemes, perhaps via a policy of zero-rated VAT on energy efficiency measures.

There is still debate over whether there should be a cap, perhaps £5,000, on how much the improvements can cost. The legislation requires only ‘appropriate, permissible and cost-effective’ legislation.  

Cost-effectiveness is defined under The Green Deal Golden Rule. In other words, savings from the work should repay its cost during its expected lifetime. You should not face upfront or net costs for the improvements. 

Listed buildings and exemptions

A number of rental buildings in our area, Brixton and Battersea, are listed. The Residential Lettings Association has confirmed that listed buildings will be exempt from achieving an ‘E’ rating providing landlords can prove that they have introduced as many energy efficiency measures as they can within the limits of the listing regulations.

Initially the law will apply only to new tenancies and renewals, but from 2020 it will apply to all tenancies.

Certain exemptions exist, and loans may become available. Watch out for details in October to see whether they apply to your situation.
 
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