Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

The Green Deal

28 January 2013 was the first day on which works can start under the government’s Green Deal initiative on residential properties in England.

The aim of the Green Deal is to improve the energy efficiency of properties by removing the upfront cost of improvements and instead allowing the cost to be paid in instalments through energy bills.

Green Deal Finance can be used to pay for improvements such as cavity wall or loft insulation; upgraded heating; installation of draught-proofing; installation of double glazing; and installation of renewable energy technologies such as solar panels or wind turbines.

A Green Deal Assessor will carry out an inspection of the property being proposed for improvements and will make recommendations as to the most suitable – weighing the cost of the improvements against the likely savings that the improvements would attract. The golden rule is that the savings enjoyed as a result of installing any particular technology must be equal to or greater than the cost of the finance required.

Once the Green Deal Assessor has made recommendations, a Green Deal Plan will need to be signed with a Green Deal Provider. The Green Deal Plan is a contract setting out what work will be done and how much it will cost and once it has been signed the Green Deal Provider will arrange for a Green Deal Installer to carry out the contracted work. All participants in the process are bound by the DECC’s code of practice and must display the quality mark.

Once the Green Deal Installer has carried out the work, the cost will be payable in instalments through energy bills. As the finance obligation passes with the liability to pay the energy bills rather than with the person that signs the Green Deal Plan, Green Deal finance must be disclosed in all new property transactions as part of the EPC information. A written acknowledgment of the finance should be obtained from the tenant, licensee or purchaser in a standard form to confirm the information has been given.

In respect existing tenancies, neither the landlord nor the tenant can sign a Green Deal Plan without the permission of the other.

There are plans afoot to obligate landlords to install green technologies upon receipt of a “reasonable request” from tenants but, as we understand it, these are unlikely to come into force before April 2016.

Filed under: England & Wales, , , ,

EPCs – latest news

Tomorrow 9 January 2013 sees the coming into force of changes in the regulations regarding Energy Performance Certificates.

The government announced these changes to the EPC, and air conditioning inspections regime, on 19 December 2012. The changes come from the EU Directive (Council Directive 2010/31/EU) on the energy performance of buildings (EPB Directive 2010). The directive mainly consolidates the regulations but there are some significant changes in relation to the contents, issue and display of EPCs.

In relation to residential lettings the significant changes are as follows:
• property advertisements are to include details of the energy performance certificate rating ( the A-G rating) where available;
• the requirement to attach the front page of the certificate to any written material is to be removed;
• listed buildings are exempt from the need to have a certificate on their sale or rent.

The above does get around some of the problems that agents have been facing such as how to attach a front page to the particulars on display in the window. However agents will nevertheless have to produce the EPC to potential tenants and there is no additional leniency in respect of obtaining it, and the penalties have not been amended for failure to comply.

Remember the other requirements still apply and you can read about them on our previous blogs here.

Filed under: England & Wales, , , , , ,

Update on EPCs.

The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2011 will come into force on the 6th April 2012 and amend the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007.

A lettings agent will now need to be satisfied that an EPC has been commissioned prior to marketing a property for rental. Obviously this will not pose a problem where the agent obtains it him or herself. The previous regulations required a seller to obtain a EPC upon marketing but where this was not possible then the seller or a person acting for him had up to 28 days from the date the property was placed on the market to use reasonable efforts to obtain it. The amended regulations have now reduced the 28 days to 7 and apply not only to sales but also to rental properties. There is also however an additional allowance of up to 21 days immediately upon the expiry of the 7 days during which the EPC must be obtained. It may see a bit odd to reduce the requirement from 28 to 7 days and then immediately add back on 21 days to get back to 28 days. However, the spare 21 days being given back is only available if an EPC has not been obtained “despite using all reasonable efforts” so a failure to obtain an EPC in 7 days will lead to hard questions being asked. From a lettings point of view, though this does represent a liberalisation as previously the requirement was to have the EPC prior to the offering of the property with any written particulars.

All of you will have seen the asset chart of the EPC on marketing material when properties are advertised to let. Unfortunately the placing of the asset chart will no longer be permitted on its own. Any ‘written particulars’ will now need to include the first page of the EPC. That is the asset chart and the various calculations that underpin it. Page 2, which contains recommendations for improvements, can be handed to the tenant at a later stage but before signature of the relevant tenancy agreement.

‘Written particulars’ include electronic communications (emails) and are defined in the new regulations as containing at least two of the following:
• a photograph of the building or any room in the building,
• a floor plan of the building,
• the size of the rooms in the building,
• the measured area of the building, or,
• in relation to a building being rented out, the proposed rent.

Any advertisement (whether print or electronic) or window display, which includes at least 2 of the above conditions, should therefore include the first page of the EPC. As almost all adverts include a photo and the price or a size and price it will be hard to avoid this. Theoretically, one could bypass this by giving a description without specific sizing along with a price or an artist’s impression plus price.

The penalty for failing to adhere to the regulations remains the same. This is £200 for dwellings and will still be enforced by trading standard officers.

There is no doubt that the reason for these amendments was to clear up what the obligations are and when they apply and this appears to have been achieved. However the requirement to use ‘reasonable efforts’ will no doubt cause problems when people attempt to circumvent what is in essence an effort to achieve a greener attitude to housing.

Filed under: England & Wales, FLW Article, , ,

Energy Act 2011

Many of our readers have heard about the Energy Bill in some form or other.

The Bill was given the force of law on the 18 October 2011.

The basic issue for our readers is that:

• The Act includes provisions to ensure that from April 2016, private residential landlords will be unable to refuse a tenant’s reasonable request for consent to energy efficiency improvements where a finance package, such as the Green Deal and/or the Energy Company Obligation (ECO), is available.

• Provisions in the Act also provide for powers to ensure that from April 2018, it will be unlawful to rent out a residential or business premise that does not reach a minimum energy efficiency standard (the intention according to the Department of Energy and & Climate Change is for this to be set at EPC rating ‘E’).

Before the deadline of April 2018, the Secretary of State will need to pass regulations so that a landlord can not let a property until the above has been complied with. There does not appear to be any indication of when this might be however, the current Energy and Climate Change Secretary Chris Huhne has made his intentions clear about introducing the regulations.

The Act only applies at present to tenancies governed by the Housing Act 1988 or the Rent Act 1977 and so does not apply to Common Law or Company Let agreements but this could change and if it does we shall update. The other issue to note is that the Act does not apply where the EPC has been obtained prior to the Regulations coming into force.

Whether or not landlords believe that this:

“The Green Deal is a win-win opportunity for landlords by removing the upfront cost of work to upgrade the property making it cheaper to run, more environmentally friendly and ultimately more attractive to rent.” (Chris Huhne, Secretary of State)

The fact is that the legislation is coming into force and agents should warn landlords of it so they have more than enough time to carry out the energy improvements.

Filed under: England & Wales, , , , , ,

Changes, always changes….

On 16 March 2011, the Energy Bill was introduced into the House of Commons with its First Reading. The Second Reading was delivered on 10 May.

The Energy Bill has been designed to provide for a step change in the provision of energy efficiency measures to homes and businesses, and make improvements to enable low carbon energy supplies and fair competition in the energy markets.

The Energy and Climate Change Secretary Chris Huhne announced plans to introduce regulations to ensure that all landlords face minimum energy efficiency standards under the Green Deal.

At the Second Reading the proposals included amongst other things:

• From April 2016 landlords will not be able to refuse reasonable requests from tenants, or local authorities acting on behalf of tenants, to improve their property;

• From April 2018 the government will make it unlawful to rent out a house or business premise which has less than an “E” energy efficiency rating, ensuring at least 682,000 properties will have to be improved.

The Green Deal is the coalition’s national plan of home improvements to make houses and businesses cheaper to run through better energy efficiency.

The proposals will help the most vulnerable as more than a quarter of a million of the worst insulated rented homes are classed as fuel poor.

Energy and Climate Change Secretary Chris Huhne said:

“Our proposals provide a voice for tenants living in poorly insulated, draughty homes. The Green Deal is a win-win opportunity for landlords by removing the upfront cost of work to upgrade the property making it cheaper to run, more environmentally friendly and ultimately more attractive to rent.
For those landlords who don’t take up the Green Deal then we will get tough so that by 2018 the poorest performing rented housing stock is brought up to a decent standard.”

Measures may include financial support for landlords making the changes and incentives to get the work completed sooner rather than later. However the coalition government has not given any details on this aspect of the Green Deal, which will no doubt mean, many will be reluctant to begin the work until they do.

Filed under: England & Wales, FLW Article, , , ,

Lettings EPCs and HIPs

Further to our post yesterday on the suspension of HIPs and the amendments to the EPC regulations, the amendment has now been published on the OPSI website.

From an examination of the amendment regulations it can be seen that the main change is an insertion of a new regulation 5A into the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007. The new regulation 5A simply states that where a property is being sold and it doesnot have a valid EPC one must be commissioned before it is put on the market.

The amendement regulations make no change to regulation 5 of the original EPC regulations which require let properties to have an EPC available to show a tenant at the time that written particulars are provided or the property is shown, whichever is th earlier.

Therefore, the HIPs amendement will have absolutely no effect on the rental market.

Filed under: England & Wales, ,

HIPs Suspension and Lettings EPCs

The DCLG has today announced that it is suspending the operation of Home Information Packs from immediate effect.

It should be noted that there are no plans (and the Government has no power) to suspend EPCs. The announcement states that a new statutory instrument called the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2010 will be introduced to amend the EPC regulations to require vendors to have instructed an EPC before commencing marketing. Unfortunately, this regulation is not yet available and until it is made available there is no answer to whether this will alter the position on EPCs for letting of residential property.

However, there is no reason to think that this will affect residential lettings in any manner and agents are advised to obtain EPCs before showing property or providing written details as they should have been doing all along.

Filed under: England & Wales, ,

Household Energy Management Strategy

The Department of Energy and Climate Change published a new strategy on 2 March regarding energy management and efficiency in homes. A press release on this (with video) is available here while the full document can be found here.

While they are keen that this is led by the social housing sector there is a proposal to regulate the Private Rented Sector as well. The intent seems to be to demand that all rented property after 2015 has loft and cavity wall insulation, where this is practicable. In the meantime more efforts will be made to inform landlords of the grants available to them to assist with energy efficiency upgrades. Some of this may be achieved through the use of the landlord register that the Government has made clear it wishes to introduce in England and Wales.

It is unclear how this strategy will fair after the election. Presumably, if Labour win they will carry it forward. The Conservatives will, no doubt, wish to have their own strategy but it is certainly the case that David Cameron has styled himself in a “green” mould and there will presumably be a similar set of proposals if he is victorious.

This should really be seen as a wakeup call for landlords who are still letting properties with low energy efficiency. Improvements will help to attract tenants and will also ward off the attention of local environmental health officers. The Energy Saving Trust is an excellent source of information and advice including flagging of grants available to make improvements.

Filed under: England & Wales, ,

Thermal Efficiency in the PRS

On 23 February Tony Lloyd MP sought to introduce a new bill under the 10 minute rule relating to thermal efficiency in the Private Rented Sector.

This bill seeks to impose a minimum thermal efficiency requirement on properties in the PRS and properties failing to reach this level will be prohibited from being let. Over time the level of thermal efficiency required will progressively increase. There will also be a new offence of marketing a property to let which could have its thermal efficiency improved at reasonable cost.

Given that it was admitted during Mr Lloyd’s speech that properties in the PRS have, on average, higher thermal efficiency ratings than owner-occupied this move seems rather misguided at best. It is also notable that while the social housing sector has very good thermal efficiency ratings this is largely due to the stock held by Housing Associations and properties retained by Local Authorities represent some of the least thermally efficient property.

10 minute rule bills rarely become law and are used by backbenchers to raise issues with Government (and the media!) which they would like consideration to be given to. This bill will inevitably become a casualty of the election but it should be noted as it is part of a wider drive to increase energy efficiency in property and it is likely that the PRS will undoubtedly be at the forefront of any regulation to do this.

Filed under: England & Wales, ,

Emergency Accommodation and EPCs

Many people in Cumbria are now looking for emergency accommodation. It is worth bearing in mind that there is a statutory defence to a requirement to have an EPC prior to letting a property in an emergency situation.
This is provided by regulation 42 of the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007. This regulation stipulates that it is a defence to a prosecution under the regulations when:

  1. The letting was to provide emergency accommodation for the tenant due to a need for urgent relocation;
  2. There was no EPC currently in the possession or control of the landlord and there was insufficient time to reasonably obtain one prior to the letting; and
  3. An EPC has been obtained and provided to the tenant as soon as was reasonably practicable after the letting commenced.

Obviously, any landlord seeking to take advantage of this exception would be well advised to obtain written confirmation from the prospective tenant that it is an emergency and they should also book the EPC as soon as possible, and ideally before the start of the tenancy.

Filed under: England & Wales, ,

EPCs and the HHSRS

We have been surprised to be told of a few cases where Local Housing Authorities are serving improvement notices under the Housing Health and Safety Rating System on landlords because they have a very poor Energy Performance Certificate rating. Presumably this is on the basis if the ‘excess cold’ hazard profile in the HHSRS. However, an EPC is a measure of the cost of heating and lighting a property and says nothing about how warm or cold that property can be. Therefore it is hard to see on what basis action is being taken.

If anyone would care to give some more information we would be grateful!

Filed under: Uncategorized, , ,

Further Energy Performance Tweaks

The Energy Performance of Buildings (Certificates and Inspections) (England & Wales) (Amendment) Regulations 2009 came into force on 10 August 2009.

These make a small amendment to the EPC regulations to allow for disclosure of EPCs, recommendations and Display Energy Certificates on the sale of properties. Where an EPC is produced for a property which is for sale and the rating on the certificate is in bands F or G the keeper of the EPC register (ie. one of the licensed bodies who register and maintain records of inspectors) is permitted to disclose the certificate to the Energy Saving Trust Ltd, a body licensed by government to provide information and advice in relation to energy saving in the home.

The objective of the disclosure is to allow the trust to provide information to the owner of the property on things they can do to improve the efficiency of the property and grants that might be available to pay for the improvements.

In general this will have limited effects on the sector except to encourage improvement of less efficient properties. This may be of benefit as these properties are generally less desirable and harder to sell although, in truth, most agents will already be pointing vendors and landlords towards the trust and its free advisory services in any event.

Filed under: Uncategorized, , ,

EPC Directive Changes

The European Commission, the primary legislative body of the EU, has put forward proposals to make changes to the Energy Performance of Buildings Directive (EPBD). CLG has published a consultation on the proposals to allow it to reflect the views of UK stakeholders back to the commission.

The proposals are in two categories. The first stage, which UK government supports seeks to clarify and simplify the directive. The other part seeks to expand and strengthen the directive. The UK government is largely opposed to this, in common with its general policy on Europe, and takes the view that many of the issues should remain with member states under the general principle of subsidiarity.

Looking at the key proposals they are as follows:

  • buildings occupied by public authorities or where the public visit regularly are to have a Display Energy Certificate on display where the building is larger than 250 sq m as oppose to the current size of 1000 sq m;
  • any commercial or domestic building which is renovated will also have to have its energy performance upgraded at the same time for which targets will be set;
  • there will be minimum requirements for technical building systems such as boilers in commercial property.

Naturally this will cause increased costs for many older properties.  However, given the impact of empty building rates on commercial property and the consequent knocking down of some of these properties the impact may well be small.  In residential properties properties being renovated will have to have their performance improved but this would probably be done in the majority of renovations anyway.

The consultation is open for responses until 2 October 2009.

Filed under: Uncategorized, , ,

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