Are you an energy-efficient landlord?

One in 10 rental properties in the UK could be unlettable next year, according to government figures, if landlords fail to improve their energy efficiency.  More than 400,000 properties in England and Wales could be taken off the lettings market because they fail to meet energy performance standards.

From 1 April 2018, privately rented properties must meet new energy efficiency standards or landlords cannot rent them out to new tenants or relet to existing ones. Landlords should review their properties to check they meet the required standards

The new minimum energy efficiency standards (MEES) come as a surprise to many landlords, one in four of whom do not even know their property’s energy rating, despite needing an energy performance certificate (EPC) by law, according to a recent survey by the energy company E.ON.  Letting agents warn landlords not to put off improvements until nearer the deadline.

“Don’t take things for granted. Since EPCs were first introduced, the standard for achieving an E grade has changed, and landlords and agents should review their properties to check they meet the required standards,” says Dorian Gonsalves, chief operating officer at Belvoir Lettings.

Some landlords may seek to pass on the costs of the improvements to tenants by raising the rent. “However, by carrying out the works, landlords are likely to improve the value of their property and enjoy better relationships with tenants – who, in turn, should benefit from energy bill savings,” says Jeremy Leaf, of Jeremy Leaf & Co estate agency in north London.

Don’t be complacent

Local authorities will be able to impose civil penalties of up to £4,000 for non-compliance. “Landlords who do not have a valid EPC could also face a fine of £200 and may also be unable to serve a Section 21 notice to gain possession at the end of the tenancy,” says Mr Leaf.

Another potentially high cost to landlords is the loss of income while their property is legally unlettable.

Missing insulation

Most of a building’s heat is lost through poor sealing of doors and windows, and through poor insulation in the roof and walls.

Ensure insulation is installed in lofts if it is missing, or thicken existing insulation to reduce heat loss from the roof. Also consider cavity wall insulation.

Although the Government has stopped funding the Green Deal Finance Company, which lent money to Green Deal providers, landlords may still be able to get funding from the providers financing the scheme directly.

Some energy companies also offer some help to landlords. E.ON has a range of services to support landlords upgrading their property, including online account management that allows landlords to take better control of their portfolios through to insulation and heating services. Some energy companies may meet the cost of insulating homes better if tenants are elderly or receiving benefits.