Put energy into improvements now

The Energy Act 2011 states that from April 2018 (at the latest), it will be illegal to rent out residential or business premises that do not reach a minimum standard of energy efficiency.

Although it’s not yet clear, the Government seems to be indicating that the lowest acceptable energy rating on an Energy Performance Certificate should be Band E. Landlords who have F and G rated buildings (and possibly some in Band E) will need to actively attend to improving their energy efficiency.

There are circumstances where no EPC is needed, for instance when a building is listed (this applies if it shows up on a search of the English Heritage database or the Welsh equivalent list at CADW) or where certain facilities are shared between tenants.

Guidance from the Department of Communities and Local Government can be downloaded at here.

It makes sense to improve efficiency sooner rather than later, when all the procrastinators will be in the same frenzy and improvement firms may well be cashing in by raising charges.

Carrying out fresh assessments now, particularly where the EPC is Band E, and then factoring in the costs of upgrades where necessary, possibly spreading them over a period, will help limit the financial impact of carrying out the work. It may also be that as time goes on some energy efficiency grant funds’ availability diminishes through over-use or cuts in funding – at present some improvements may come within the scope of the Green Deal.

Your accountant may be able to advise on the best way to make use of capital allowances in addition to planning the effects on your cashflow. You should also bear these changes in mind if you are looking to expand your portfolio through buying more properties, some of which may have EPC assessments that are already several years old.


Lisa Simon, 
Partner
Head of Residential Lettings
T: 020 7518 3234
E: lisa.simon@carterjonas.co.uk