Energy Efficiency Rating Cost Cap
Landlords with properties that have an energy performance rating of F or G will be expected to pay up to £3500 from 1st April, in order to improve the energy efficiency rating of the property.
The majority of landlords will be unaffected by the change, because their properties will already be compliant.
This is because as from the 1st April 2018 it has been a requirement for any properties rented out in the private rented sector (new tenancies) to have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations will come into force for all existing tenancies on 1st April 2020.
Currently, landlords can only rent out a property with an F or G rating if they have successfully registered an exemption. This exemption is usually granted because either the tenant refuses consent for the works or the landlord was unable to get third party funding to cover the costs of the energy efficiency improvements. So up to now it has never required the landlord to pay for the works themselves.
From April 1st 2019, landlords in properties with an energy performance rating of F or G will be expected to pay up to £3500, in order to improve the energy efficiency rating of the the property.
Landlords will only be able to apply for an exemption if:
The tenant refuses consent for the works
The energy efficiency works will cost more than £3500 (including VAT) out of the landlords pocket
Landlords with existing ‘no cost’ registered exemptions will only remain covered by these until the end of March 2020.
Where upgrades are necessary, the average cost to improve an F or G rated property to a band E is expected to be around £1,200 – far below the upper ceiling being brought forward under new regulations. Examples of measures include: installing floor insulation, low energy lighting or increasing loft insulation. If upgrades will cost more than £3,500, landlords will be able to register for an exemption.