New energy regulations – what do they mean for landlords and tenants?

New energy regulations – what do they mean for landlords and tenants?

As of Friday, April 1, landlords won’t just be affected by the additional 3% stamp duty on second homes, they will also have to abide by new regulations giving tenants the right to demand energy-efficiency improvements to the rental properties they live in.

Landlords will be unable to refuse consent unless they have reasonable grounds to do so. However, it will be the responsibility of tenants to fund any improvement works while also ensuring that it brings no upfront costs to the landlord, unless the landlord has agreed to contribute.

Tenants might not find funding these upgrades so easy now the Green Deal, which was expected to provide much of the money for this initiative but was closed down in July last year, is no longer available.

This regulation shouldn’t be mixed up with those coming into force from April 1, 2018, which will require all rental properties to brought up to at least an E- rating on an Energy Performance Certificate (EPC).

The energy efficiency improvements legislation applies to any properties in England and Wales let under an assured tenancy, or a tenancy or shorthold that is a regulated tenancy for the purpose of the Rent Act 1977.

They also apply to “properties let (a) on a tenancy which is an assured agricultural occupancy (b) on a protected tenancy within the meaning given in the Rent (Agricultural) Act 1976, or (c) on a statutory tenancy within the meaning of the Act”.

Energy efficiency improvements can have a positive effect on both landlords and tenants, helping to improve the environment and allowing landlords to save on costs (a more energy efficient property will mean cheaper energy bills).

This, in turn, might allow a landlord to set lower rents, which is something that will please tenants.

Research by the National Landlords Association (NLA) has also shown the importance placed on energy efficient properties by tenants.

A recent survey revealed that 35% of tenants considered the energy efficiency of a property to be an important factor when it came to picking a suitable place to rent.

Potential tenants clearly think about it, so landlords may be wise to consider the benefits that improving the energy efficiency of their homes could have, especially with the new EPC regulations only a few years away anyway.

Cheaper fuel bills, more comfort, a positive impact on the environment and tenants staying put for longer (therefore reducing the chances of damaging void periods) are all good reasons why a more energy efficient property could bring with it great rewards.

This new regulation doesn’t oblige landlords to upgrade their energy efficiency yet, but it might be something to consider doing anyway given the potential advantages it could have.