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, , , ,

Making better use of Energy Performance Certificates and data.

On 2nd March 2011 the Department for Communities and Local Government released a publication detailing consultations on the effectiveness of EPCs in a number of areas.

The Climate Change Act 2008 commits the UK to a statutory target to reduce its carbon emissions. With the UK dedicated to reducing its emissions by 80% in 2050 any strategy that assists with this target is going to be welcome. The EPC provides vital information on the energy efficiency of buildings which allows the government to assess whether we are on the way to the target reduction.

Therefore the consultation is aimed at improving the effectiveness of the EPC with a view to making better use of the energy performance data.

The consultation while wanting to improve and enhance the use of the EPC it is also looking to extend the scope of the requirement to include:

Houses in Multiple Occupation (HMO)
At present the law does not require EPCs to be produced when rooms are rented out in a HMO property however, the recommendation is for EPCs of the whole property to be made available to prospective tenants. This will ensure that from the outset when the first room is let the Tenant will have access to a valid EPC of the whole building. As a valid EPC lasts 10 years the obligation on the Landlord is unlikely to be considered onerous.

Short Term Holiday Lets
At present EPCs are not required for short term holiday lets as people renting a holiday home for a short period of time would be unlikely to consider energy efficiency when selecting a property. However the DCLG proposes that EPCs should be required if holiday lets are rented out for a combined total of four months or more in one year. This ensures that properties rented for less than four months are still immune from the requirement.

Extension of Display Energy Certificates to a Commercial Building
A Display Energy Certificate is like an EPC except it records the actual energy consumption of that building up to a period of three years. The recorded energy consumption must then be displayed as a certificate in a similar format to an EPC. Currently they are only required for public buildings larger than 1,000m2 and are required to show how efficiently the building is operated. The Certificate is accompanied by an Advisory Report which sets out three levels of cost-effective improvements which can improve the building’s efficiency.

Given that commercial property is responsible for 18% of carbon emissions in the UK the proposal to extend DECs to commercial properties is an attractive one. Current government plans aim to reduce the floor area in public buildings to 250m2 and it is hoped that the DCLG proposals to initially pilot the scheme voluntarily to commercial buildings will be taken up.

Finally the DCLG is also looking to clarifiy when an EPC is required on the sale or letting of building. The DCLG has put forward a proposal to amend Regulation 5(2) of the 2007 Regulations making it clear that the Regulations require Landlords to make an EPC available to a prospective tenant as soon as they request either information about or to view a building, and they further seek to remove the opportunity for Landlords to defer making an EPC available until contracts are exchanged on sales. The amendment is not a complete rewording of the regulation but clarification that Landlords must make an EPC available at the earliest opportunity.

Whether you like or dislike the introduction of the EPC, buildings account for 50% of the UKs carbon emissions and a reduction is needed.

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

A rise in dangerous homes?

A BBC report over the weekend cast a gloomy and critical eye over the private rental sector, based on a report from the Chartered Institute of Environmental Health (CIEH). The report says that “One million rented homes in England ‘are dangerous’”, further adding that the number will rise because of changes in housing benefit and legal aid.

However, the government has abandoned any plans for a national landlord register, and has believed that too much red tape will be worse, not better for tenants. (See Grant Shapps’ comments).

Legislative protection of the health and safety of tenants exists in plenty. In addition to the landlords repairing obligations under the LTA 1985, any agent will be aware of the powers of local authorities to enforce standards under the HHSRS: for example there is no legal obligation on a landlord to take away polystyrene tiles or to put a banister on stairs – but an environmental health officer and local authority has the power to insist this is done. Such powers exist in respect of owner-occupiers too.

Further we have had agents report to us that despite the fact that it is compulsory for EPC ratings to be included in written information given to prospective tenants, some local authorities have advised that they are not acting where this is not done.

To predict a future of rogue landlords rampaging over the rights of tenants living in derelict properties is to ignore the hard work and the substantial self-regulation that landlord groups, bodies like NFOPP and NALS and many landlords and agents themselves, as well as local authorities, put in to make sure that people get decent affordable housing. The CIEH itself reports on how local authority initiatives are helping to raise standards in housing.

The large number of the queries we get to our helpline service regarding health and safety and repairing obligations is testimony to the fact that agents and landlords do want to know their obligations and seek to uphold them.

Painsmith has blogged extensively on disrepair, the HHSRS, EPCs and the private rental sector.

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

Energy Performance Consultations and Next Steps

The DCLG has published summaries of responses to a series of consultations on Energy Performance Certificates and has indicated how it will be taking the matter forward.

The main proposals of interest to the PRS being consulted on were:

  1. Wider publication of EPC data
  2. Requiring EPCs where individual rooms in HMOs were rented
  3. Requiring EPCs for holiday lets
  4. Publication of EPC figures in all property advertising

The first proposal was to create new powers for EPC data including address data and EPC recommendations to be published. The government intends to take this forward and will implement new legislation to allow for this. The legislation will deal with any data protection issues that may arise. Naturally this means that prospective tenants and third parties will have unfettered access to EPC reports and will be able to tie them to properties.

Currently where an HMO is rented out as a single property an EPC is required but where HMO property is rented out on a room by room basis then an EPC is not required. The government is not planning to fix this discrepancy as it is not required to by the relevant EU directive.

The EU directive which required EPCs actually demands that holiday lets for more than 4 months include an EPC. The legislation implementing it here did not cover the point but Government guidance said that all holiday lets were excluded. The Government will fix this by amending the guidance to make clear that EPCs are required for holiday lettings in excess of 4 months. Arguably they should actually fix the regulations to make this issue clearer and to define what is meant by a holiday letting.

The latest version of the underlying EU directive requires that all property advertising carry the EPC rating by July 2013. Currently this information is only required where written information is made available to a prospective buyer or tenant. Arguably, of course, advertising is written information and so an EPC should be provided with adverts already. However, one supposes that the reference is more to the sort of small adverts found in newspapers and magazines which typically supply very limited information. At the moment the Government does not intend to implement this proposal for the simple reason that they do not have to until 2013. However, agents should be aware that this is on its way and they will need to adjust procedures accordingly.

The overall message seems to be that the Government will only do what it absolutely has to do to service its EU requirements.

Filed under: England & Wales, FLW Article, Northern Ireland, Scotland, ,

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, ,

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