2017 has been a year of bad news to many landlords when the Government introduced some less favourable tax regulations. This was worsened by the new mortgage regulations imposed on Professional Landlords (landlords with 4+ property portfolio) in September.
Unfortunately, there is more to come; According to Gov.UK, from April 2018, landlords of privately rented domestic and non-domestic property in England or Wales must ensure that their properties reach at least an Energy Performance Certificate (EPC) rating of E before granting a new tenancy to new or existing tenants. These requirements will then apply to all private rented properties in England and Wales – even where there has been no change in tenancy arrangements – from 1 April 2020 for domestic properties.
So, what does it mean and how do you know what to do next? We have put some guidelines together for you:
- Who does it affect?
There several ways in which you will be classed as letting a property for these purposes:
- You grant a new assured tenancy, including a shorthold
- You renew or extend an existing assured tenancy, including a shorthold, by agreement with the tenant. This can be done when you grant a fresh tenancy to the same tenant or simply agree with the tenant that the existing tenancy will be extended
- A statutory periodic tenancy comes into existence following the ending of a fixed term assured tenancy (shorthold or non-shorthold). At that point, the law imposes a new tenancy on the parties where the tenant stays after the fixed term has run out. This is treated as a new letting for these purposes
- A new assured tenancy by succession comes into existence when a family member takes over a Rent Act protected tenancy
- A new tenancy is granted to a Rent Act protected tenant of the same or a different property owned by the same landlord
- What do you need to do next?
The first thing to do is to check the EPC certificate for the let property and check what your rating is. If its above E you can relax and get on with your day. If, however, it is E or below you need to look at improving your rating ASAP to avoid penalties. Here are a few things to consider which we gleaned from John German Estate Agents:
- LIGHTING: Replace existing halogen or non-Low Energy Lighting (LEL) with LEL’s, Compact Fluorescent Light’s (CFL) or Light Emitting Diodes (LEDs) – simple and inexpensive to introduce.
- ROOF INSULATION: Ensure that your loft insulation is at least 270mm in depth – simple and inexpensive to introduce. If your loft is at 90mm or less you can get funding to have the loft filled or topped up!
- WALL CONSTRUCTION: If your property has a cavity wall construction, ensure that this is filled – simple and inexpensive to introduce. Funding is also available for this efficiency measure and has a huge bearing on the EPC rating.
- HEATING CONTROLS: Even if you have an old boiler, the introduction of modern controls such as a room thermostat, individual Thermostatic Radiator Valves (TRVs) and Boiler Programmer will have a positive bearing on the EPC results – simple but slightly more expensive to introduce.
- CENTRAL HEATING SYSTEM: Replacing an old, inefficient boiler will have a significant impact on any property’s EPC rating – significant alteration with high expense and longer payback period.
- RENEWABLE TECHNOLOGIES: Virtually ALL Renewable Technologies are currently incentivised via government backed and guaranteed Feed-in-Tariffs (FITs) and will go on to provide domestic hot water and central heating at significantly reduced rates in comparison to many other systems.
Of course, if you find that this is too costly you may want to consider selling the property. Happy to have a chat if you wanted to discuss further. Get in touch.