DBEIS Consultation over Energy Efficiency Standards for Property Investments

A consultation was launched yesterday by the Department for Business, Energy & Industrial Strategy (DBEIS) regarding plans to amend upcoming minimum energy efficiency standards to prevent landlords exempting their property due to a lack of third-party funding.

The DBEIS has proposed amendments to the domestic minimum standard regulations. They wish to remove the current ‘no cost to the landlord’ principle, replacing it with the introduction of a ‘landlord funding contribution’ element when a landlord is not able to obtain suitable ‘no cost’ funding.

The Government has discussed intentions to introduce a cost cap on the amount a landlord would need to invest on an individual property. A cap of £2,500 per property has been put forward. Landlords would therefore be expected to contribute financially up to the level of the cap in order to ensure that their property reaches an EPC rating of E.

From 1 April 2018, new Minimum Energy Efficiency Standards (MEES) will prohibit landlords from granting new tenancies as well as renewing existing leases for properties with an EPC rating of F or G. There is currently an exemption where improvements cannot be funded fully by by central government, a local authority, or any other person other than the landlord.

DBEIS is also seeking opinions on a proposal to limit the validity of any ‘no cost’ exemptions that were registered between October 2017 and the point at which amended regulations came into force which is currently expected to be 1 April 2019. It is proposed that such ‘no cost’ exemptions would end when the new regulations came into force. The consultation is open until 13th March with the Government intending to issue its response to the consultation in spring 2018.

The National Landlords Association (NLA) is set to respond to the consultation and is in disagreement with the introduction of a cost cap, although the departure from the previous suggestion of £5,000 is welcome. It argues that the imposition of a cost cap will raise the financial burden placed upon landlords, with the risk of costs being passed on to tenants. Another unsavoury outcome is the potential for affordable housing to be taken from the sector as landlords become burdened by increased costs.

The NLA website states: ‘We are disappointed that the proposals outlined in the consultation do not include the reintroduction of the Landlords Energy Saving Allowance (LESA), which was scrapped in 2015. The NLA had called for its reintroduction in last month’s Budget as a means to incentivise and encourage energy efficiency improvements across the whole sector, not just at the bottom.’