Hints and Tips on how private landlords/managing agents can improve ‘energy efficiency’ in their portfolio

The first question why bother?

Energy Performance Certificates (EPCs) have been around since 2007, for some they are seen as red tape and bureaucratic; for others they provide valuable information about how energy efficient a property is, which may also determine a tenants choice to rent a particular property. Somewhere in the middle of these two disparate views is the where most sensible contributors sit.

However, did you realise that a NEW Government Policy means that Landlords will not be able to rent out any private rental property with a low scoring EPCs from 2018 in England and Wales. The Minimum Energy Efficiency Standards (MEES) legislation is currently set so that no domestic properties with an F or G rating can be let from April 2018. The Government have also indicated that they wish to raise the minimum standard to a D rating by 2025 and a C rating by 2030. Similar scores are set for the commercial market.

Recent figures released by DCLG underline the scale of those who will be affected by MEES with 20%-25% of residential and commercial properties in England and Wales hitting or falling below the Minimum Energy Efficiency Standards.

If this doesn’t make you sit up and pay attention then nothing will.

In fact since the 1st April 2016, Elmhurst has seen many savvy Landlords, Managing Agents and Property Portfolio Fund Managers contact us for advice. Especially in the commercial sector, where some initial moves are being made to potentially discard energy inefficient buildings from funds, and the altering of policies to only invest in efficient buildings giving longer term confidence! 

How to manage this effectively?

The good news is that the ‘facts’ are already at Landlords and Managing Agents disposal. Firstly get hold of the latest EPC – look at cost effective measures; find out any effected properties. Use the data on it in a positive way. Plan your works over time. Look at the quick and easy wins.

Is there any Funding available?

Many government backed schemes have been available over the years including Green Deal, ECO, Renewable Heat Incentive (RHI), Feed In Tariffs (FiTs) that have allowed many people the ability to improve the energy efficiency of properties in the UK with some funding mechanism.

For Private Landlords the main player was Green Deal; which was effectively put on hold by Governement but was re-launched last year with a new private funding. For savvy landlords this ‘pay as you save’ is gold dust, an ability to fit energy efficient products and technologies into properties and let the tenant pay for it via fuel bills. What is not to like?

The back stop of April 2018 looms large! Elmhurst suggests that the following action plan will help Landlords and Managing Agents manage this situation effectively:

Action Plan:

  1. Get a new EPC – know where you are. Identify the properties current scores.
    1. Use a professional Elmhurst accredited Energy Assessor to produce up to date EPCs. Why? If you use old ones then:
    2. a) they last 10 years if produced in 2007 they are due to run out soon.
    3. b) If not recent they use old methodologies and fuel prices and when you get a new one; the score may be different – an uncertainty that makes this a risky ploy.
  2. Identify those that fall into F & G – keep an eye on those that are E rated, they may fall with future editions of the methodologies and fuel prices!
    1. Imagine not managing the D and E rated properties well; and a new EPC is required at change of tenancy and it doesn’t make the new backstop value!
  3. Identify the potential improvements – concentrate on cost effective recommendations
  4. Plan an effective roll out
  5. Think about a short, medium and long term plan

Conclusion

Registered Social Landlords have been doing this for years, and Government are putting some of this governance into the Private Rental Market place. Waiting for policies and funding to help deliver this is risky and of course this may work out, but nothing with Government is certain.

Will the future market by driven by better energy efficient properties and buildings? These are warmer and cheaper to run, and are a better longer term investment prospect. But nobody knows for sure. However one thing is certain if in 2018 you can’t rent out the property, then panic will set in, and if you need an installer, they may well be a bit busy! (Which is good news for them!) Elmhurst advice you not to get caught out, start acting now with simple data you can succeed. Do nothing and the lawyers will not allow properties to be let with low scores come 2018.


You can find out more information about MEES and upcoming legislation from Elmhurst's guides and fact sheets linked below:

Domestic MEES Guide

Domestic MEES Fact Sheet

Non-Domesitc MEES Guide

Non-Domestic MEES Fact Sheet 

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