Rented Property Energy Performance Certificates

Energy Assessment of Rental Property Energy Inspection, buildings inspection by an Energy Assessor, using RdSAP & SAP assessment procedures will commence from 1st October 2008. The Energy Surveyors are required to inspect rented property owned by Landlords and issue an EPC for private rented homes, Houses in Multiple Occupation (HMO's) and housing owned by RSL's (Registered Social Landlords). Property Lettings whereby the owner lets out their home to tenants will also require to obtain an EPC. Homes for rent must appoint an energy assessor to provide an energy certificate which is lodged with central government. EPC Validity The Energy Performance Certificate is valid for 10 Years from the date of issue. Certification will raise awareness of energy efficiency in the landlord & private investor property sector in a number of ways; The system will be visible, quantifiable and mandatory. The system will enhance transparency, and provide a benchmark for both building and end-user. The system will enable the energy efficiency of buildings to be compared. These factors will change the view of investors in the commercial property sector, due to sustainability issues and costs of utilities to service those buildings. As sustainability issues rise up the corporate agenda and companies place greater emphasis on corporate social responsibility policies, investors will question the environmental footprint of their property portfolios. An EPC provider can assist in the provision of energy inspection services and the issue of certificates for rented accommodation. Domestic Energy Assessors can issue an EPC for rented property, these can only be issued by an approved Energy Assessor. Investors will be keen to find energy efficient buildings due to the potential returns they offer. The most important factor is the threat to the value of an energy inefficient buildings due to accelerated obsolescence, considerable resources may be required to bring these properties up to the latest standards. Landlords may need to invest further cash resources to enhance their "unsustainable" assets in the market place. In this environment "sustainable" assets would be more liquid than their "unsustainable" counterparts. It is probable that a 2 tier market will develop, where energy efficiency will be considered as "prime space".  Eventually when buildings have been surveyed to determine their efficiency ratings and the data collated in a central database this information could be made available to property appraisers, i.e the Tenant. However, as the demand for sustainable buildings expands, this may change in the longer term, it is possible that a significant adverse yield impact on energy inefficient buildings may become evident, as a result of lack of rental growth prospects. The legislative and social context for investing in commercial property is changing, and the introduction of the EU Directive (EPBD) represents just one area that will affect landlords, tenants and owners of property portfolios. Tenants may take a keener interest in the energy rating of homes for let, in order to assess the potential energy usage of such buildings, a higher energy rating,  means lower fuel bills. Owners of rental property can find tips on improving energy ratings, please refer to Energy Saving Tips and Advice Making EPCs available to prospective tenants The EPC and recommendation report must be made available free of charge by the landlord to a prospective tenant at the earliest opportunity and no later than: when any written information about the building is provided in response to a request for information received from the prospective buyer; or when a viewing is conducted of the rental property; or  if neither of those occur, before entering into a contract to let the property. An Energy Performance Certificate (EPC) does not have to be made available if: the landlord or his/her agent or representative believes that the prospective tenant is unlikely to have sufficient funds to rent the property or is not genuinely interested in renting that type of property; or  the landlord is unlikely to be prepared to rent out the property to the prospective tenant (although this does not authorise unlawful discrimination) In order to assess a properties performance and gain an energy rating certificate, owners of rented property must enlist the services of an energy assessor who will conduct a survey using the full SAP methodology if required, some HMO's fall into this category. The inspector must be licensed and accredited by a professional body. Energy Performance Certificates (EPC) have the potential to change the private property market in a profound way. Shrewd investment in the current climate may well prove lucrative in tomorrow's future. Owners of private rental premises will need to appoint a qualified energy assessor and obtain an Energy Performance Certificate (EPC) Energy assessment of  property is already underway and the timetable for the deadline for EPC's has been established. Landlords' Energy Saving Allowance This is a tax allowance that was introduced in 2004. It is very simple to claim: you get the appropriate energy efficiency measures installed, then complete box 5.36C on your tax return at the end of the year. Tax relief is for a maximum of £1,500 per property. For example: suppose your annual taxable income is £20,000 you undertake insulation measures to the value of £1,500 your total taxable profit is reduced to £18,500 your saving at 22% tax is £330, or at 40% tax is £600 If you undertake energy efficiency measures to more than one property the tax saving is multiplied by the number of properties you apply measures to. Appropriate energy efficiency measures are: cavity wall insulation solid wall insulation loft insulation draughtproofing floor insulation hot water system insulation Note that the LESA now applies to corporate as well as individual landlords. Energy Performance Certificates Landlords will be required to obtain an Energy Performance Certificate as properties are re-let from October 2008. Once you have an EPC for a particular property it will have a life of ten years. In other words, if you re-let that property three times during the ten year period you do not have to pay for three energy surveys. The EPC will ‘band’ your property from ‘A’ (good) to ‘G’ (bad) with a label that will be familiar to anyone who buys a fridge or other electrical appliance. Just as an ‘A’ rated fridge will be cheaper to run than one rated ‘C’, so will an ‘A’ rated home. Running costs are very important, especially to people on a low income. A home with a low energy rating will be expensive to keep warm, leaving your tenants with two choices: either pay a very high proportion of income on warmth (and sacrifice something else), or risk a range of medical conditions associated with living in a cold damp home. A number of Plymouth landlords are concerned about who would undertake the EPC survey and have expressed an interest in the Council providing this service. If you might be interested in Plymouth City Council providing such a service to landlords, let us know by emailing us. Help for your tenants Your tenants may be entitled to grants towards the cost of insulation and heating measures. The Government’s Warm Front grant will cover the cost of central heating and insulation for people on benefit. There may be an ‘excess charge’ however that would have to be paid by the landlord. Work cannot proceed without the permission of the landlord. If you have tenants with a cold-related illness and who are not on benefit they may be entitled to a Plymouth Healthy Homes grant for heating or insulation. Once again there may be a cost to the landlord, and landlord permission is required before the measures are installed. Avoid electric heating Many landlords ask about electric heating. It is important to recognise that electric heating is very expensive to run compared to gas. Gas is roughly 2p per unit whilst electricity is roughly 10p. Electric heating is also considerably more carbon intensive than gas (unless your electricity comes from a ‘green’ source such as wind power). A home with electric heating will have a low Standard Assessment Procedure (SAP) rating. The SAP (energy) rating will determine which band the home is in on the forthcoming Energy Performance Certificate. The worst possible scenario for someone on a low income is to live in a home with solid walls (usually pre-1930) with electric heating. Such a person will almost certainly be in Fuel Poverty and could suffer poor health because they cannot afford to keep themselves comfortably warm at home. Whilst gas central heating with a good control package is ideal, there are circumstances where alternative heating might be necessary. For example, if there is no mains gas supply in the local area. In such circumstances better alternatives to electric heating are available, such as air-source heat pumps. HIP Pack InFo

The Government set out their approach and criteria for phasing the implementation of Home Information Packs (HIPs) including Energy Performance Certificates on 11 June. Sixty per cent of the market is now covered by HIPs. And the criteria for roll out to the rest of the market have now been met. We will therefore complete the phased roll out by extending coverage to the rest of the market from 14 December.

First time buyers of one and two bedroom homes will be the main beneficiaries as they will now get important information about their new home for free. Information such as searches for which they would previously have had to pay will now be included in the HIP paid for by the seller, reducing the costs of the first step onto the property ladder.

But all householders will benefit from having detailed information about the energy efficiency of their home, and measures to save on their fuel bills and cut carbon emissions.

Home buyers could potentially be eligible for hundreds of pounds to get help with insulation or other improvements.

Two hundred thousand Energy Performance Certificates have been generated since the summer. The analysis of the early phase of rollout of HIPs found that the average rating for homes was an E, and we know that approximately one-fifth of all homes are likely to get an F or G rating. This means that basic measures could significantly cut both fuel bills and carbon emissions. The Energy Savings Trust have also estimated that homeowners could also save around £300 a year on fuel bills from implementing the recommendations in the Energy Performance Certificate.

We will establish a new Green Homes Service to offer those buying or selling a home with an F or G rating free or discounted help with energy efficiency measures, by linking them up with grants and loans provided by energy companies and others. Home buyers could potentially be eligible for hundreds of pounds to get help with insulation or other improvements.

As set out in the criteria of 11 June there are now sufficient energy assessors and home inspectors fully qualified and accredited to provide Energy Performance Certificates for all homes bought and sold. Some 5794 people are now accredited.

In addition, the government has also conducted monitoring and analysis of the implementation programme to ensure continued smooth roll out. Early monitoring shows:

• HIPs are taking on average seven to 10 days to prepare.
• The majority of property, and drainage and water searches, are being delivered within five days.
• Energy Performance Certificates (EPCs) are being prepared on average within two to four days.
• On average, a HIP costs between £300 and £350. Most of these are not new costs, as they cover the cost of searches and other documents which have simply been transferred from buyer to seller at the beginning of the process. The Energy Performance Certificate (EPC) is of course new but provides consumers with valuable information of the costs of running their home.
• Competition from HIPs is reducing the costs of average property searches. Eighty-five local authorities have already reduced their charges by £30 on average.

The Government have also commissioned and considered extensive analysis by Europe Economics on the impact of HIPs on the market. We are today publishing their independent report which includes modelling on the impact as well as analysis of the first few months of implementation. It finds no evidence of any impact on transactions or prices, although there is a predicted short term impact on new listings as sellers change the timings of their listings. It concludes that the impact on listings is short lived, and the impact on the market is marginal compared to the wider factors.

We also asked Europe Economics and Dr. Peter Williams who is a member of the National Housing and Planning Advice Unit to consider whether changing housing market conditions meant we should change the approach to completing the roll out. Their conclusion was that there are strong arguments for rolling out as planned, and that further delay could cause greater difficulties and uncertainties in the market.

In the light of this evidence therefore we will tomorrow lay the commencement order to extend HIPs and EPCs to one and two bedroom properties from 14 December. In order to ensure continued smooth implementation, we are also extending the temporary provisions on first day marketing for all properties from 1 January to 1 June, providing flexibility for sellers as part of the roll out to one and two bedroom properties.

The implementation of Home Information Packs so far, and the work of the Stakeholder Panel, has also highlighted further improvements that are needed to benefit consumers.

HIPs have already led to improvements in the delivery and cost of searches, with significant reductions in the cost of searches, and in some areas, substantial reductions in the delays in producing searches. However, there are still wide variations in costs and services and we want to see further improvements for consumers. We will therefore publish guidance on access and charging in December for local authorities and personal searchers with the aim of speeding up searches and delivering a fairer deal for consumers.

We have asked Ted Beardsall, Deputy Chief Executive of the Land Registry - and member of our Home Buying and Selling Stakeholder Panel - to advise on what else could be done to improve the search process, ensuring better quality and timeliness of information, and improving value for money for consumers.

Stakeholders have also raised concerns about the costs and timeliness of leasehold information, and the impact that this will have on Home Information Packs when one and two bedroom properties are included given the higher number of leasehold properties. In the majority of cases we would expect leasehold documents to be readily available and easily provided as part of Home Information Packs. However we are aware that some leaseholders, whether in the pre-existing system or creating a HIP, can find the relevant documents difficult to obtain quickly. We know that some also face disproportionate charges to access their documents.

As leasehold information is an important part of the home buying and selling process, and is already generally paid for and provided by the seller, we continue to believe there are considerable advantages to consumers from having leasehold information early on in the Home Information Pack. However, to ensure continued smooth roll out we will phase the introduction of leasehold information in response to stakeholder concerns. We will temporarily amend the HIP regulations so that the lease document itself must be included, but other leasehold information will be introduced as a requirement in six months time. This will allow HIPs for one and two bedroom properties to bed down in advance of leasehold information being required. In the interim, we have also asked Ted Beardsall to advise us and the Home Buying Stakeholder panel on what more can be done to improve the timeliness and cost of leasehold information, alongside the work on searches.

From April 2008, we will begin to roll out EPCs for newly built homes, as well as across commercial property for sale, rent or construction. By October 2008 all public buildings will have a display certificate.

All these measures are designed to promote the interests of the consumer. We will continue to actively monitor the rollout of HIPs and energy performance certificates and the home buying and selling process to ensure we can respond where further improvements are needed. The introduction of HIPs is part of a wider programme of reforms to home buying and selling including e-conveyancing and better redress, which aims to provide consumers with a clearer, more transparent and effective service, with better value for money, benefiting all potential homebuyers and helping in tackling climate change.