Your own virtual office

Words by Clare Bell,
Managing Director, Energy PA

From October 2008 landlords offering property for rent will be required by law to provide prospective tenants with an Energy Performance Certifi cate (EPC) for their property.

The EPCs will have to be provided free either when (or before) any written information about the property is provided to prospective tenants or a viewing is conducted. They will not have to be provided if the landlord believes the prospective tenant is unlikely to have suffi cient funds to rent the property, is not genuinely interested in renting, or the landlord is unlikely to be prepared to rent the property to the prospective tenant. A new certifi cate will not be required on each let since, in the case of rental property, EPCs will be valid for 10 years.

The requirement is being introduced to comply with the EU´s Energy Performance of Buildings Directive (EPBD) which applies to all property, including rented property. This became law in 2003 with full implementation scheduled for 2009, in order to provide time for a suffi cient number of Energy Assessors to be trained. The Directive´s requirements have been introduced into English and Welsh law along with the Home Information Pack (HIP) regulations that require sellers to produce Packs providing information about their title, local searches, plus an EPC.

So far as energy performance is concerned, the regulations require an EPC when a building is constructed, sold or rented out. When included in a HIP related to a property sale, the EPC should be no more than 12 months old when the property is fi rst marketed. In other circumstances, EPCs have a 10 year life.

Local authorities can choose which body has responsibility for enforcement, but in nearly all cases, this will be Building Control (for new-builds) and Trading Standards (for existing buildings). Communities and Local Government is the Government department responsible for EPCs. Accreditation schemes are the bodies which all Energy Assessors must join in order to produce EPCs — they ensure the standards of assessors´ work. Enforcement agencies have the power to ask to see an EPC for the property, and to issue a penalty notice if the right certifi cate is not in place. There are no powers of entry.

Trading Standards would have access to the Landmark Registry (where certifi cates are stored) if they needed to check that the right certifi cate has been produced for a property. Investigations by enforcement agencies may be necessary in order to establish whether a breach of the Regulations (which are law) has taken place.

Enforcement agencies have the power to issue penalty notices. In the fi rst instance, a person can ask for the enforcement agency (eg Trading Standards) to review the case. After the enforcement agency reviews the case, if it upholds the penalty notice, the person can appeal to the county court for them to hear the case.

When a person receives a penalty notice and pays a fi ne for failure to provide an EPC, they must still provide the EPC. This means that if, following the fi ne, they still failed to provide a certifi cate, another penalty notice could be issued. If a landlord rented out a property without an EPC and then later sold the property without an EPC, this would be two separate breaches. The penalty charge specifi ed where the building is a dwelling is £200.

With over a million private properties changing tenants every year, the energy rating is likely to become a key issue in tenancy negotiations, so landlords will be keen to make their properties as energy-effi cient as possible before putting properties up for rent.

Landlords wishing to make energy saving improvements to their properties either before or after obtaining an EPC are offered some help in the form of Government grants and other schemes.

Information about these can be found on the following websites:

• Warm front —
  www.warmfront.co.uk;
• Landlord Energy Saving Allowance —
  www.hmrc.gov.uk/
  budget2005/revbn37.htm;
• Energy Savings Trust
  www.energysavingtrust.org.uk.

The Landlord´s Energy Saving Allowance, originally introduced in April 2004, now covers loft insulation, cavity wall insulation, solid wall insulation, draught proofi ng, hot water system insulation, and fl oor insulation.

Expenditure on these items would otherwise be treated as capital expenditure — which means it could not be deducted from rental income to arrive at a taxable item. However, the LESA allows up to £1,500 per property spend on such items as a straight deduction from rental profits.

The allowance is to run until 2015. The ´per property´ rule (rather than the former ´per building´ restriction), means that for a house converted into three words by Clare Bell, managing director, Energy PA fl ats an allowance of £4,500 can be claimed. However, the allowance is not available for holiday lets or resident landlords.

Landlords keen to enhance the energy effi ciency of their properties through Government grants and fi nancial incentives can enjoy long-term benefi ts through improvements. Energy Improvement Grants are readily available to both landlords and tenants. By acting now, landlords will be able to predict the property´s energy rating and do something about it before the legislation takes effect.

In addition to the several thousand assessors fully trained and accredited, landlords may also enjoy some additional fi nancial benefi t by undertaking the reports prior to the 1 October introduction, with assessors offering EPCs at very competitive rates.

A sample of an Energy Performance Certificate can be found at: www.homeinformationpacks.gov.uk
/pdf/sampleEPC.pdf