A new consultation was launched in the run-up to Xmas focusing on plans to amend upcoming minimum energy efficiency standards so that landlords may no longer exempt their property due to a lack of third-party funding.
The Department for Business, Energy & Industrial Strategy (DBEIS) is proposing amendments to the domestic minimum standard regulations by removing the existing ‘no cost to the landlord’ principle and introducing a ‘landlord funding contribution’ component where a landlord is unable to obtain suitable ‘no cost’ funding.
The Government is intending to introduce a cost cap: a limit on the amount any landlord would need to invest in an individual property. A cost cap of £2,500 per property is the Government’s preferred option.
Landlords would therefore be expected to financially contribute, up to the level of the cap, to ensure their property reaches at least an EPC rating of E.
DBEIS is also seeking views on a proposal to curtail the validity of any ‘no cost’ exemptions registered between October 2017 and the point at which amended regulations came into force (currently anticipated to be 1 April 2019). The proposal is that such ‘no cost’ exemptions would end when the new regulations came into force.
The consultation is open until 13th March. The Government intends to issue its response to the consultation in spring 2018 and make amending regulations during autumn 2018 that will take effect from 1st April 2019. Full details are available here.
Current Minimum Energy Efficiency Standards
From 1st April 2018, new Minimum Energy Efficiency Standards (MEES) will prohibit landlords from granting new tenancies (or renewing/extending existing tenancies) for properties with an EPC rating of F or G.
There is currently an exemption available where the improvements cannot be wholly financed, at no upfront cost to the landlord, by means of funding provided by central government, a local authority, or any other person.
From 1st April 2020 this restriction on landlords letting out sub-E rated properties is extended to cover all existing tenancies for properties in scope of the regulations.
The Government has set out in their recently published Clean Growth Strategy that they will soon consult on plans to increase the minimum EPC rating to a D by 2025, and to C by 2030.