No more expensive to heat rented homes

The government has just published draft regulations designed to promote energy efficiency in rented homes.  

The Energy Efficiency (Private Rented Property) (England & Wales) Regulations 2015 are significant because landlords will be banned from renting out the most energy—inefficient housing from 2018.   This is estimated to effect almost 10% of England &Wales’ 4.2 million private rented homes which are rated F or G for energy efficiency.

At present, there is no obligation at all on landlords to provide rented housing which is energy efficient.  Only if a lack of heating creates a hazard under the Housing Health and Safety Rating System, and the landlord is served with a notice by the Local Authority, might a landlord have to provide additional heating.  But even that does not mean the property has to be brought up to a higher standard of energy efficiency.  These regulations change that from 2018.

From 1 April 2016 tenants living in F and G rated homes will be able to request improvements such as more insulation.  Landlords will still be able to let out F and G rated properties beyond 1 April 2018 for the remainder of existing tenancies, but only up until 1 April 2020.  However, after 1 April 2018 they will not be able to renew an existing tenancy or let out the property to someone else until it is brought up to an E rating.

From 1 April 2016 landlords will have to consider a formal request from a tenant to improve energy efficiency and respond.  For new tenancies from 1 April 2018, tenants should be safe in the knowledge that their home will at least be up to “E” rating.  In turn that should cut energy bills for tenants and carbon emissions for everyone.

Landlords will of course be concerned about the expense of improving inefficient properties.  The government has promised to publish an impact assessment and has said there are a range of support mechanisms such as the “green deal” that could alleviate upfront costs for landlords.  While tenants will no doubt be happy at the prospect of reduced energy bills, they may be less happy at the prospect of rents rising so that landlords can pay for the necessary improvements.   Without any rent control, there is nothing to stop landlords passing on the additional costs to tenants.

For the voluntary phase from 1 April 2016 to 1 April 2018, a landlord failing to respond to a request in the proper form by a tenant may be subject to an application by the tenant to the Property Chamber (First Tier Tribunal).  In practice, the short length of lettings in the private rented sector, and the ability of a landlord to end a tenancy by s21 notice, is likely to mean that this slow and cumbersome procedure is little used.  

Meaningful sanctions only apply for the second phase after 1 April 2018.   Enforcement from 1 April 2018 will be in the hands of local authorities who will have the power to levy fines as well as “name and shame” landlords who fail to comply with warning notices.  The experience of additional and selective licensing of the private rented sector is that local authorities will be active in using these powers.

There are a range of support mechanisms landlords can use such as the “green deal” to fund improvement.  Landlords would be well advised to consider whether they are eligible, and apply early for support, to help bring up their properties to the requisite standards before 1 April 2018.