We have previously mentioned a number of changes that landlords need to be aware of – namely Section 24 tax changes, new regulations, and the implementation of the PRA for mortgage lending.
However, on a more distant horizon, there is new legislation coming into affect in 2018 with regards to energy efficiency in rental properties.
It is estimated that around 35% of properties in the UK could be un-lettable by April 2018 if action is not taken to improve energy efficiency ratings.
The Energy Act 2011 contains a provision for minimum energy standards, and from 1st April 2018 it will be unlawful for a landlord to lease a non-domestic property with an EPC Rating of less than E.
Part of the act is already in effect – namely that private residential landlords will be unable to refuse a tenants’ 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.
It is recommended by us that landlords check their EPC and see if it is above the new 2018 legal requirement.
If not, it would be advisable to seek professional advice on how to make your rental property more energy efficient.
The improvements that could save you the most energy depend on your property, but typical examples include:
- insulation, eg solid wall, cavity wall or loft insulation
- double glazing
- renewable energy generation, eg solar panels or heat pumps.Although the government has stopped funding the Green Deal Finance Company, which was set up to lend money to Green Deal providers, you may still be able to get Green Deal funding from providers financing the scheme themselves.
Landlords can also do simple inexpensive things, like changing lightbulbs and downlighters for LEDs.
Many LEDs have a rated life of up to 50,000 hours. This is approximately 50 times longer than a typical incandescent, 20-25 times longer than a typical halogen, and 8-10 times longer than a typical CFL. Used 12 hours a day, a 50,000 bulb will last more than 11 years, which saves you the hassle of having to change light bulbs when tenants complain about them failing. Tenants will also appreciate the saving on their utilities bill!
If replacing a boiler, it is worth the extra expense to fit an “A” rated one that comes with a 10 year warranty.
If you plan your budget to address these issues over the next 12 months, you will be ready for April 2018. You can also off-set these improvements to your property against tax.
Furthermore, tenants are increasingly asking about how much the monthly utility costs are when viewing a potential rental, so if you can help tenants with their monthly bills, you will likely experience less voids and tenants will stay longer in their warm and comfortable home.
Your rental property will undoubtedly be one of your most important assets, so it makes sense to spend money on improving it and keeping it compliant with upcoming legislation.
We have always found that “prevention” in property is much less expensive, less risky, and results in less landlord stress than “cure”.
That is why we advise landlords to plan ahead and ensure your rental property is fit for purpose in the years ahead.
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