New Energy Performance Certificate rules come into force and only apply to new tenancies until 1st April 2020. The rules state that from 1st April 2018, a property with an EPC rating of ‘F’ or ‘G’ which is being sold as a buy-to-let unit with vacant possession, will not be in a lettable condition. Existing tenancies will be unaffected until 1st April 2020 when all properties, with tenancies new or existing, will be included under the Act. If there is an existing tenancy that passes to the new owner on the sale of the property, the tenancy can legally continue until 1st April 2020 without the need for an EPC of at least an ‘E’ rating. An EPC is required every time a property is advertised for sale or for rent. The requirement for an EPC has been the law since 2008 (2009 in Scotland) and they remain valid for 10 years.
There are exemptions, for example where all cost-effective energy efficiency improvements have been carried out. To be cost effective there must be a pay back within 7 years (i.e. the energy savings a property makes must be equal to or more than the cost of implementing the changes in the first place.) Where a third party has refused consent for the relevant energy efficiency improvements to be made, this third party will usually be a sitting tenant or local authority, or where a suitably qualified independent surveyor has provided a report stating that relevant energy efficiency improvements will result in a reduction of more than 5% in the market value of the property or building.
The regulation does not yet apply to properties in Scotland as the Scottish EPC requirement is currently in a Consultation period.
For many lenders they will be asking the valuer to confirm the EPC rating in their report on the property. If the rating is an F or G, lenders may still offer the case, but it could be with a full retention. You may be advised to visit https://www.epcregister.com , where you can obtain full details of the suggested work to bring the rating up to standard for letting. Once an updated EPC rating has been received, the retention potentially would be lifted, and the case re-offered.