This article has been updated to incorporate amendments made by The Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2016

 

Introduction

 

Since 6 April 2008, an energy performance certificate has bee required on rented property in England and Wales. It was only in April 2012 that energy performance certificate (EPC) legislation was significantly overhauled. Despite this, yet again, changes to EPC legislation are being made. However, rather pleasantly this time, these new regulations seem a much simplified version of the old regulations. In addition, the new regulations consolidate a number of amendments into one shiny new set. The Energy Performance of Buildings (England and Wales) Regulations 2012 take effect on 9 January 2013 and the regulations revoke The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 and all the many amending regulations from 2007 to 2012. [1] The biggest change is probably the removal of the requirement to put the front page of the EPC into advertisements and lettings particulars which is now replaced with a requirement to insert the asset rating. See later for full details. When produced, an EPC will also be accompanied by a recommendation report.

 

Relevant person

 

The relevant person who is responsible under the regulations remains as before namely, the prospective landlord when the building is being rented out and the seller when being sold. When the building is being constructed, it’s the person who carries out the construction. [2] For this article, we have focused on landlords and tenants but I think in all cases a reference to landlord can be taken to equally mean seller and tenant to buyer. As will be seen below there is provision for an agent making enquiries regarding the commissioning of an EPC but even where an agent is employed, the landlord (or prospective landlord) will always be ultimately responsible for ensuring an EPC is given.

 

Definition of building and dwelling

 

The term building has been slightly altered and now includes a further term of “building unit” and “building envelope”. Building means a roofed construction having walls, for which energy is used to condition the indoor climate. Building unit means a section, floor or apartment within a building which is designed or altered to be used separately. Dwelling means a building or part of a building occupied or intended to be occupied as a separate dwelling.

 

Minimum level of energy efficiency

 

From 1 April 2018, all rented property (both domestic and non-domestic) which is to have a new tenancy must have an EPC rating of at least “E”. This requirement also applies to all renewal tenancies to the same tenant for the same property on or after 1 April 2018. The duty is also triggered by any periodic tenancy arising on or after 1 April 2018 after expiry of any fixed term because the duty is not only triggered by a renewal but also “an extension”.

 

From 1 April 2020, all domestic lettings (including existing) must acheive an “E” rating or better.

 

HMO bedsit accommodation

 

In particular in England, we highly recommend that an EPC is obtained for the building even where the lettings may be on individual room lets. This is because the penalty for failing to provide an EPC is that no section 21 possession notice can be served. It’s our view that it’s not worth the argument with the court as to whteher an EPC is required in a particular instance and instead to just have one done and ensure the tenant gets a copy before or at the time of signing for the tenancy. The cost is around £60 – £80 and lasts 10 years.

 

That being said, the guidance issued for the marketing, sale and letting of dwellings states:

 

An EPC is not required for an individual room when rented out, as it is not a building or a building unit designed or altered for separate use. The whole building will require an EPC if sold or rented out.

[source: Energy Performance Certificates for the marketing, sale and let of dwellings, April 2014]

 

If the property as a whole does have an EPC and is let as individual rooms, the EPC for the property as a whole must acheive an “E” rating or better in order to continue renting the rooms from 1 April 2018:

 

Please note that there is no obligation to obtain an EPC on a letting of an individual non self-contained unit within a property, such as a bedsit or a room in a house in multiple occupation (HMO) . However the property in which the unit is situated may already have its own EPC covering that property as a whole; this could be because the property had been bought within the past ten years, or because it had previously been rented out on a whole-property basis. If a property as a whole has a valid EPC and that EPC shows an energy efficiency rating of F or G, then the owner/landlord will not, from April 2018, be able to issue new tenancies for non-self-contained units within the property until steps are taken to comply with the Regulations.

[source: para 9, The Private Rented Property minimum standard – landlord guidance documents]

 

Prospective tenant

 

As before, an EPC is to be made available to a prospective tenant. A person becomes a prospective tenant in relation to a building when he or she –

 

  • requests any information about the building from the relevant person or the relevant person’s agent for the purpose of deciding whether to buy or rent the building;
  • makes a request to view the building for the purpose of deciding whether to buy or rent the building; or
  • makes an offer, whether oral or written, to buy or rent the building.

 

 

 

When to make available the EPC

 

The making available and giving of the EPC requirements has been slightly re-worded and simplified. The prospective landlord must make available free of charge a valid energy performance certificate to any prospective tenant at the earliest opportunity and in any event no later than whichever is the earlier of:

 

  • The first time the prospective landlord makes available to a prospective tenant any written information (such as Lettings particulars for example) about the building to the person; or
  • At the time which the prospective tenant views the building. [3]

 

Only the EPC needs to provided at this stage (although must provide both the EPC and recordation report at this stage). The landlord must ensure that a valid energy performance certificate and recordation report has been given free of charge to the person who ultimately becomes the tenant. [4] As before, there is no requirement to make available an EPC if the prospective landlord believes on reasonable grounds that the prospective tenant

 

  • is unlikely to have sufficient means to rent the building;
  • is not genuinely interested in renting a building of a general description which applies to the building; or
  • is not a person to whom the prospective landlord is likely to be prepared to rent out the building. [5]

 

 

 

Exemptions from making available an EPC

 

An EPC may not be required if the landlord can demonstrate that any of the following applies:

 

  • buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance; – (including a listed building, see page 6 DCLG guidance). Please have in mind listed buildings are NOT always exempt. It is only if certain energy improvements would unacceptably alter their character or appearance. How do you know what works would unacceptably alter the character or appearance if you haven’t obtained an EPC? What does “unacceptably altering” mean? Also, actually doing the EPC does not alter the character or appearance of the property! In our view therefore, most listed buildings will require an EPC (or at least it’s safest to have one).
  • buildings used as places of worship and for religious activities;
  • temporary buildings with a time of use of two years or less;
  • industrial sites, workshops and non-residential agricultural buildings with low energy demand;
  • non-residential agricultural buildings which are in use by a sector covered by a national sectoral agreement on energy performance;
  • residential buildings which are used or intended to be used for less than four months of the year or, for a limited annual time of use and with an expected energy consumption of less than 25% of what would be the result of all-year use;
  • stand-alone buildings with a total useful floor area of less than 50m².
  • Buildings under construction that have not yet been completed. [6]
  • And, as previously, if the building is to be demolished.

 

 

 

Format of EPC

 

It is sufficient for a prospective landlord to give or make available a copy of the EPC [7] and it may be given or made available electronically if the intended recipient consents to receiving the certificate electronically. [8]

 

EPC must be commissioned before marketing

 

Just as previously, an EPC must be commissioned (ordered) before a building is marketed for rent [9]. Before marketing the building, an agent acting on behalf of the prospective landlord must be satisfied that an energy performance certificate has been commissioned for the building. [10]. The prospective landlord and agent (if there is an agent) must use all reasonable efforts to secure that a valid energy performance certificate is obtained for the building before the end of a period of 7 days starting with the day on which the building was first put on the market [11]. If it was simply not possible to obtain the EPC within 7 days then, a further 21 days is allowed but this further 21 days is only allowed if all reasonable efforts were made to obtain the EPC in the first 7 days [12].

 

Written particulars and commercial media

 

Under the old rules, the front page of the EPC was required to be put into written particulars which included certain marketing material such as displays, lettings particulars etc. However, the requirement to put the front page of the EPC into particulars has been removed. From 9 January 2013, the asset rating of the building expressed in the energy performance certificate must be stated in any advertisement of the rental in commercial media [13].

 

Where a building or building unit to which this regulation applies is offered for sale or rent on or after 9th January 2013, the asset rating of the building expressed in the energy performance certificate must be stated in any advertisement of the sale or rental in commercial media. [Regulation 11]

 

Commercial media is defined in the DCLG guidance as being (but not limited to):

 

  • newspapers
  • magazines
  • written material produced by the landlord/agent that describes the building being offered for rent
  • the internet

 

Asset rating is defined in regulation 2 as (as amended by The Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2016:

 

“asset rating” means an energy performance indicator determined from the amount of energy estimated to meet the different needs associated with a standardised use of a building

 

The guidance provides that:

 

There is no requirement to display the full certificate but where there is adequate space, the advertisement should show the A-G graph. However, it is recognised that this will not always be possible. In such cases the advertisement should include the actual EPC rating of the property (for example C). [14]

 

The regulations make no mention nor requirement to insert the graph whatsoever despite what the guidance suggests. it’s unclear what is meant by “adequate space?” Therefore, in all written particulars such as:

 

  • lettings particulars
  • display cards (including window displays)
  • newspaper or magazine advertisements
  • internet advertisements
  • any other commercial media

 

The prospective landlord or letting agent should place either (or both) of the following within the media:

 

  • the asset rating by way of a numerical score and representative letter e.g. “Energy efficiency rating 44 – band E” or,
  • insert the graph from the EPC which contains the asset rating band. The graph may be more visually pleasing and understood by prospective tenants.

 

Once a request for written particulars is made, the EPC must be available for the prospective tenant. If the request was in person, it should be given with the letting particulars otherwise, it should be given at the viewing. Alternatively, if the information is on a website then the EPC may be made available and linked to on-line. However, if the prospective tenant requests a paper copy, then they must given one because the electronic method is only suitable if the prospective tenant consents to receiving the EPC that way.

 

How long does an EPC last?

 

An energy performance certificate and accompanying recommendation report lasts for 10 years unless another EPC has been produced within that time in which case only the latest one produced survives. [See reg 9(2) for EPC and reg 4(4) for recommendation report].

 

Penalties

 

Like the majority of the regulations, the penalty notice parts have been slightly re-written and slightly simplified. However, the general outcome is basically the same as the previous regulations. In relation to a dwelling and a failure to commission before marketing or make available / give an EPC to a tenant, the penalty is £200.00. [15] Where the building is not a dwelling (commercial buildings) the penalty is calculated by the formula found in regulation 38(2) with a minimum of £500 and maximum of £5000.  

 

Section 21 notice

 

In England, no section 21 notice may be served at a time when the EPC has not been given to the tenant. Please see this article for full details.  

 

Appeals

 

A review of a penalty notice may be requested within the period specified in the notice (which must not be less than 28 days [16]). If, after a review, the penalty charge notice is confirmed by the authority, the recipient may, within the period of 28 days, appeal to the county court against the penalty charge notice on one of the following grounds (and only on one of the following):

 

  • that the recipient of the notice did not commit the breach of duty specified in the penalty charge notice;
  • that the notice was not given within 6 months of when the duty was allegedly breached or does not comply with a requirement imposed by the regulations; or
  • that in the circumstances of the case it was inappropriate for the notice to be given to the recipient. [17]

 

 

 

Footnotes

 

 

 


 

 

 

  1. Schedule 3 The Energy Performance of Buildings (England and Wales) Regulations 2012
  2. Regulation 2 The Energy Performance of Buildings (England and Wales) Regulations 2012
  3. Regulation 6(2) The Energy Performance of Buildings (England and Wales) Regulations 2012
  4. Regulation 6(5) The Energy Performance of Buildings (England and Wales) Regulations 2012
  5. Regulation 6(3) The Energy Performance of Buildings (England and Wales) Regulations 2012
  6. Regulation 5
  7. Regulation 12
  8. Regulation 13
  9. Regulation 7(2)
  10. Regulation 7(3)
  11. Regulation 7(4)
  12. Regulation 7(5)
  13. Regulation 11
  14. Chapter 1, page 5 DCLG guidance.
  15. Regulation 38(1)
  16. Regulation 36(4)
  17. Regulation 40

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