With constant changes to the Private Rental Sector and the uncertainty of the impact of April 2017 tax regime and current legislation, it is likely that landlords will have to increase rents. Many landlords who are already challenged or frustrated by the impact of these changes by the government will consider leaving the market altogether. This will create an even bigger housing shortage. The PRS is already bolstering up council and social housing so with less private landlords in the market I wonder if the government has given a thought to the real impact of their decisions. Imposing blanket legislation to all areas of the UK when the markets are very different especially London, is not the answer. Smaller landlords owning 2 or 3 properties that provide much needed support for their communities predominate in many of the regions.
First came the changes to the tax regime, followed by the introduction of 3% stamp duty on all second homes. Lenders introduced stress testing and new guidelines to set a more stringent interest cover ratio on any new borrowing for BTL, and now the latest change to come into force in April 2018 is a change to the EPC rules.
Today, 1st August 2017 is the 10th anniversary of the introduction of the EPC. Originally an EPC was part of the old HIP packs that you were required to obtain before you could sell your property. Although the HIPs failed, the EPC remained in place. It is now a necessary certificate whenever you buy, sell or rent your home. The life of an EPC is 10 years and so today marks the expiry date of many of the first certificates that were produced.
Did you know?
It is a legal requirement to provide your tenant with an EPC when they take out a tenancy and move into your property. Failure to do so will leave you unable to serve a Section 21 notice should you ever need to evict your tenant/s.
There are more changes on the horizon
As of April 2018 all private rental homes must have a minimum Energy Performance Rating of E or it will be illegal to rent out your property. The rule applies to new tenancies and renewals, however, it will be extended to existing tenancies by April 2020.
So, what does this mean and what do you need to do?
Any homes rated F or G must be improved or cannot be rented out legally, or you as a landlord will potentially face a £5,000 fine.
Firstly, it’s a good idea to check your current EPC rating. If your certificate is coming up for renewal, then be aware that if your property currently sits in Band E there is a good chance that if you have not done any works to the property in recent times, the details taken initially are not still current, and the rating that your property has been given may not now be correct.
Bear in mind, it is also possible that if your property is reassessed and you have made improvements in recent time, it could also have gone up the banding. It is certainly worth checking while you the have time.
These improvements can be costly and according to figures from a recent Residential Landlords Association survey where some landlords have already carried out energy efficiency improvements, spending on average was £6,780.
Worth looking into
It might be worth looking at your options when it comes to funding this work. Try researching grants and loans, or schemes that are relevant in your particular area. Also check with the local authority to see if there is any funding available. You may have part or in some cases all of the costs covered. Some of the deals that have been popular with landlords in the past are The Green Deal and ECO grants.
How to check your EPC rating online
You can check your property’s EPC on the EPC register, this is a free service which lists all of the documents for properties in England and Wales: https://www.epcregister.com/
If your property is in Scotland, you can find the service here: https://www.scottishepcregister.org.uk/
Note: there are some exceptions to the minimum energy efficiency standard, but there is still confusion as to whether listed buildings and buildings in conservations areas will be exempt