Landlords of domestic properties - will you be in breach on 1 April 2020?

In less than a month, it will be unlawful for a landlord of domestic premises with an EPC rating of below E (known as a sub-standard property) to continue to let those premises, unless an exemption has been registered.

So what should landlords of domestic premises be doing? We have put together some frequently asked questions to help you to navigate the requirements.

I am the landlord of F-rated domestic premises. The premises are currently vacant. What do I need to do?

Since 1 April 2018, it has been unlawful for a landlord of a sub-standard property to grant a new tenancy, unless an exemption applies and has been validly registered on the PRS Exemptions Register. Therefore, you will need to carry out works to bring the premises up to an E rating, or register an exemption, before granting the tenancy. 

Since 1 April 2019, landlords of domestic premises have had to spend up to £3,500 per property on carrying out energy improvement works. If works exceed this sum, a landlord does not have to carry them out and can let the premises, if an exemption has been registered. If, following improvement works, the property is still sub-standard, the landlord will be able to let it if it has validly registered the exemption.

In terms of other exemptions that may apply:

• Given that the premises are currently vacant, you are unlikely to be able to rely on the consent exemption as there will be no tenant in situ. There may be other consents that are required (for example from a bank or planning authority), and which are not forthcoming, but this is unlikely.
• If a relevant energy efficiency improvement would result in a reduction of more than 5% in the market value of the property, or the building of which it forms part, the landlord may be able to register an exemption. 
• There are some temporary exemptions available, but these are very unlikely to apply in the case of a vacant property.
  
  

I am the landlord of F-rated premises, which are let to a tenant under a lease dated 1 January 2018. Do I need to do anything?

The lease was granted before the prohibition on granting a new tenancy of a sub-standard property came in. However, if it is still in place on 1 April 2020, the landlord will be in breach of the prohibition on continuing to let a sub-standard property. Therefore, you need to take action before 1 April to avoid being in breach and liable to a fine.

You will need to carry out all ‘relevant energy efficiency improvements’, and will need to be prepared to spend up to £3,500 to improve the energy efficiency of the property. As there is a tenant in the property, you may need their consent to carry out the works (depending on the terms of the tenancy agreement and the nature of the works). If you make reasonable efforts to obtain this consent, but cannot obtain it, you may be able to register an exemption. 

The other exemptions that may be available to you are set out above.

I am considering buying a G-rated domestic property that is let to tenants. What do I need to think about?

As set out above, the prohibition on continuing to let a sub-standard property from 1 April 2020 will apply. However, if you buy the sub-standard property on or after 1 April, and the tenancy is still in place, you should be able to benefit from a temporary exemption. This will give you a six month grace period during which you can either carry out energy improvement works to get the rating to an E or above, or establish whether another exemption applies. However, it is essential to note that you can only rely on a temporary exemption if you register it on the PRS Exemptions Register.

The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 (widely known as the MEES Regulations) are complex, and it is not always clear whether an exemption will apply. TLT is able to advise you on all aspects of the MEES Regulations. For guidance on how you may be affected, please get in touch.

Contributor: Alexandra Holsgrove Jones

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions.