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Landlord’s penalties under Energy Efficiency Legislation

29th March 2018
An article by Rosie Woodward
 

Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015

Residential landlords who read our previous bulletin on the Deregulation Act 2015 will be aware of the requirement for the service of an Energy Performance Certificate on tenants prior to serving a notice under s21 Housing Act 1988.

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 take matters a step further. From 1 April 2018, unless exempt, residential landlords will no longer be allowed to grant tenancies to new or existing tenants where the property has an energy performance rating of less than Grade E. The maximum penalty for non-compliance is £5,000.

The Government guidance on the regulations is a 99 page document: a link to the guidance can be found at the end of this article. Here we give a brief synopsis of the purpose, regulations, exemptions, penalties and sources of funding.

Purpose

The regulations are designed to tackle rental properties with an energy performance rating of F or G. In relevant cases, home improvements will be required where third party finance can be sourced.

The advantages of improving the energy efficiency of rental properties includes: managing the energy costs of tenants; improving the condition of properties; help reduce maintenance costs; smoothing seasonal peaks in energy demand which increases our energy security; and reducing greenhouse gas emissions.

Regulations

From the 1st April 2018, landlords of “relevant” domestic private rented properties may not grant a tenancy to new or existing tenants if their property has an Energy Performance Certificate rating of band F or G. From the 1st April 2020, landlords must not continue letting a relevant domestic property which is already let if that property has an Energy Performance Certificate rating of band F or G.

A “relevant” property is defined as:

  • an assured tenancy (including an assured shorthold tenancy) defined in the Housing Act 1988;
  • a regulated tenancy defined in the Rent Act 1977; or
  • a domestic agricultural tenancy as set out in the Energy Efficiency (Domestic Private Rented Property) Order 2015.

“Exemptions” include:

  • a building that is officially protected as part of a designated environment or because of their special architectural or historic merit where compliance with certain minimum energy efficiency requirements would unacceptably alter their character or appearance;
  • a building used as a place of worship and for religious activities;
  • a temporary building with a planned time of use of two years or less;
  • industrial sites, workshops, non-residential agricultural buildings with low energy demand and non-residential agricultural buildings which are in use by a sector covered by a national sectorial agreement on energy performance;
  • stand-alone buildings with a total useful floor area of less than 50m² (i.e. buildings entirely detached from any other building);
  • Houses in Multiple Occupation, e.g. bedsits, hostels, shared houses etc which have not been subject to a sale in the previous ten years, or which have not been let as a single rental in the past ten years;
  • furnished holiday accommodation as defined by HMRC and the holiday-maker is not responsible for meeting the energy costs; and
  • under certain circumstances where it may be demonstrated that the building is to be demolished. This is subject to a number of strict conditions as set out in Regulation 8 of the Energy Performance of Buildings (England and Wales) Regulations 2012.

Where a valid exemption applies, landlords must register the exemption on the national PRS Exemptions Register.

There is no automatic requirement for a new Energy Performance Certificate to be commissioned after its ten year expiry. A further Energy Performance Certificate will only be required the next time a trigger point is reached, i.e. when the property is next sold, let to a new tenant, or modified to have more or fewer parts than it originally had and includes services that condition the indoor climate.

Compliance Notices and Penalties

Local authorities are tasked with enforcing compliance with the regulations. Upon suspect failure to meet the minimum level of energy efficiency, a compliance notice may be issued to the landlord requesting documents such as the Energy Performance Certificate, tenancy agreement, and any Green Deal Advice Report. The landlord may also be put on notice to register documents on the PRS Exemptions Register.

Where the Local Authority decides to impose a financial penalty, they have discretion on the amount up to maximum limits set by the Regulations. The below table shows the maximum penalties which may be imposed:

Infringement

Penalty

 

Renting out a non-compliant property

If less than 3 months in breach - Up to £2,000, and/or Publication penalty.

If more than 3 months in breach - Up to £4,000, and/or Publication penalty.

 

Providing false or misleading information on the PRS Exemptions Register

 

Up to £1,000, and/or Publication penalty

 

Failing to comply with a compliance notice

Up to £2,000, and/or Publication penalty

The maximum penalty amounts apply per property, and per breach of the Regulations.

 

If the penalty is upheld following a review at the landlord’s request, the landlord may then appeal the penalty notice to the First-tier Tribunal. A penalty notice may also be served for the lodging of false information on the Exemptions Register.

Details of any breach and penalty may be published on the PRS Register with the landlord’s information.

Funding

Landlords are only required to make improvements to an F or G rated property to meet the minimum standard if they can do so at no cost to themselves. Funding can be obtained from sources including:

  • Green Deal Finance – go to https://www.gdfc.co.uk for more information.
  • Energy Company Obligation – telephone 0300 123 1234 for more information.
  • Central government or local authority – contact your local authority for details.

The information provided has been gathered from the following source: https://www.gov.uk/government/publications/the-private-rented-property-minimum-standard-landlord-guidance-documents

If you would like advice on a contentious Landlord and Tenant matter please contact our Dispute Resolution team at your local BHP office in Newcastle, Darlington, Durham, Tynemouth or Stockton in Teesside, or call 0800 590 019 now for some initial advice.

 

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