Buy-to-let landlords set to lose revenue if energy efficiency isn’t improved

 In Property

New Government legislation for buy-to-let landlords threatens to remove up to 400,000 properties from the rental market.

Find out what the new legislation states, why energy efficiency could be beneficial from a financial perspective, and how energy efficiency can be increased.

What is the new legislation?

From 1 April 2018, all privately-rented properties must meet certain energy efficiency criteria. From this date, such properties will need to achieve an ‘E’ grade in their energy performance certificate (EPC) to be let to new tenants, or re-let to current tenants.

The aim of these criteria, known as the minimum energy efficiency standards (MEES), is to ensure that all tenants can live in energy efficient properties.

Although all buy-to-let landlords are required to hold an EPC, around 25% don’t know the ratings for their properties. This suggests the switch might prove problematic.

In addition to removing property from the rental market if it fails to meet the new criteria, buy-to-let landlords also stand to lose revenue through local authority civil penalties of up to £4,000.

Landlords without a valid EPC could receive a fine of £200. They may also lose their right to serve a Section 21 notice and to regain possession of their property when a tenancy ends.

Separate legislation put into place from 1 April 2016 has given tenants the right to request energy efficiency improvements for their rental property. Although tenants are responsible for funding these changes, landlords cannot refuse consent without reason.

How can buy-to-let landlords improve energy efficiency?

Enhancing energy efficiency requires an investment in both time and money, but the potential rewards appear to make financial sense.

Adhering to the new legislation will help landlords avoid fines, civil penalties and a loss of rental income. Improving energy efficiency can also be financially advantageous in itself.

Both the ethical and cost-saving benefits of an energy efficient property can be particularly appealing when marketing a property to new tenants.

Let’s take a look at some of the steps buy-to-let landlords can take to increase energy efficiency:

Insulation

  • Add additional insulation to the loft space to comprehensively air seal it
  • Ensure all windows and doors contain double or triple-glazing, and consider panes filled with argon gas
  • Put draught-protection measures in place for all doors and windows
  • Wrap hot-water pipes with insulation material that’s resistant to direct heat

Utilities

  • Fit low-flow devices on all taps, shower heads and toilets
  • Replace old appliances (white goods, ovens etc.) with newer versions, or alternative technology
  • Install smart meters to enable tenants to monitor their own energy usage conveniently
  • Remove old-style filament bulbs and replace with LED, halogen or fluorescent bulbs
  • Consider more drastic measures, such as fitting solar panels

By taking these steps, buy-to-let landlords can significantly improve energy efficiency. This should make their properties more appealing to potential tenants and help avoid costly punitive measures.

Get more expert advice on the latest buy-to-let landlord financial requirements by calling on 3 Wise Bears.

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