Landlords in a race against time to meet energy efficiency regulations

UK landlords are in a race against time to ensure their properties meet incoming energy efficiency regulations, lawyers have warned.

With government estimates that changes to energy efficiency requirements will impact around 360,000 properties in the private rented sector, which currently have an F or G energy performance certificate (EPC) rating, experts at Bond Dickinson are warning landlords that they may face fines of up to £150,000 if they don't act quickly.

The European Commission has confirmed its support for new energy efficiency targets for buildings beyond 2020. This support is likely to be replicated by the UK government after the general election, irrespective of which party holds power.

John Ralph, head of real estate at Bond Dickinson, said: 'While the speed at which regulatory changes are implemented will vary depending on the shape of the next government, there is no question that landlords across the real estate sector will be expected to play a bigger role in meeting climate change targets. Consequently, landlords should review the energy efficiency of their buildings now as they are in a race against time to prepare for future regulatory changes.'

The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 will come into force on 1 April 2018, requiring landlords of privately rented commercial properties in England and Wales to achieve energy performance of their buildings of at least an E EPC rating upon the granting of a new lease. Similar standards for residential properties have been introduced under the Regulations.

Landlords of commercial properties may face fines of up to £50,000 for breach of the regulations for less than three months, rising to a maximum of £150,000 for breaches of over three months. The maximum penalty for non-compliance in respect of residential properties is £5,000.

Significantly, local authorities also have the power to publish information regarding non-compliance, which could bring significant reputational risks for commercial landlords.

Post-election

The election manifestos of the main political parties indicate the intention to promote an energy efficiency agenda.

The Conservative party has promised to support low-cost measures on energy efficiency, with the goal to insulate a million more homes over the next five years, as well as ensure every home and business is fitted with a smart meter by 2020.

Meanwhile, Labour plans to deliver one million interest free loans for energy home improvements with a promise to work with local authorities to update energy efficiency in low income households.

The Liberal Democrats have set out their five green laws, one of which will require all social and private rented housing to meet EPC rating band C by 2027. The party's proposed 'Green Buildings Act' will include a council tax discount for improvements in the energy efficiency of homes.

The Greens have tabled the most ambitious plans of all the parties by promising to provide a free nationwide retrofit insulation programme and a requirement for private sector housing to meet an EPC rating band C by 2025. The Greens also want to establish mandatory standards for commercial building performance.