Private Rented Sector Energy Efficiency Regulations

Fears that many rural properties may be adversely affected by the “Private Rented Sector Energy Efficiency Regulations” appear to be misplaced.

When the Department of Energy and Climate Change (DECC) published the regulations, this led to immediate reports that properties with an EPC rating in Bands F and G would become un-lettable from 1st April 2018.

The basic premise of the regulations is that from 1st April 2016 domestic tenants will have the right to request consent to make energy efficiency improvements under the regulations that have been laid before Parliament. Landlords would need to provide a response to the tenant’s request within one month.

The minimum energy efficiency standard applied will be set at E and from 1st April 2018, the regulations will apply upon the granting of a new tenancy to a new tenant or new tenancy to an existing tenant. The regulations will then be extended to apply to all privately rented property from 1st April 2020. In effect this appears to mean that any property that cannot achieve an EPC rating of A-E could no longer be let.

The concern for farms and rural estates was that very many farm and estate cottages would struggle to achieve and EPC rating of A-E. This is because they are often old and built using traditional construction methods, which may make them attractive country cottages but it is often difficult to bring them up to modern energy efficiency standards without very significant expenditure.

If these properties were to become un-lettable this would put real pressure of the availability of housing in the countryside which in turn would have serious implications for rural communities where affordable housing is already a serious problem.

But, crucially, there is the ability for landlords to seek exemptions. Essentially, where a landlord considers an exemption applies allowing them to let their property below the minimum energy efficiency standard the landlord will need to provide such evidence to a centralised register, the “PRS Exemption Register.” Landlords may be required to submit relevant evidence and details of their exemption to the Register. The Government may use this information to assist local authorities in targeting their enforcement activity.

Thus it appears that if the cost of upgrading a property is greater than the financial benefit to be gained from the upgrade the landlord may be able to apply for an exemption. The regulations will detail specific circumstances under which a landlord can refuse consent for the tenant to implement energy efficiency measures. Landlords can also claim exemption where a tenant refuses their proposals to improve efficiency.

There will be an appeals tribunal system. The regulations will include a number of safeguards to ensure that only appropriate, permissible and cost effective improvements are required under the regulations.

In time it seems these regulations will bite as energy prices rise in the long term, but in the short term it appears band F and G properties which cannot be cost effectively upgraded to band E or above will not be relegated to the scrap heap immediately although we will wait to see if the rental value of such properties will be impacted.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk