Landlords: Watch Out For This £200 Fine!
If you are a landlord, you have less than a week to get your act together and sort out an Energy Performance Certificate for your property.
Energy Performance Certificates (EPCs) detailing the energy efficiency of a property become compulsory on rented property from 1st October - that's next Wednesday.
An EPC is currently valid for 10 years and can be reused as many times as required within that period.
Landlords do not have to commission a new EPC each time a new tenancy starts but they are required to give a copy of the latest EPC to new tenants.
The bad news
Any landlords renting out a property must provide prospective tenants with one of these EPCs or face a fine of £200 and be unable to market or rent out their property. And that could mean dreaded void periods. And if there has ever been a year when you could do without rental voids, 2008 is it.
The good news
Over a quarter of landlords (27%) surveyed by Paragon Mortgages said they are planning to obtain an EPC before the 1st October deadline.
Aside from the fact that you need to have one, getting an EPC could offer landlords an advantage over their peers that have less energy efficient properties. Landlords with the most energy efficient homes will have a tangible point of difference over those with poorly rated properties, which could result in more interest from tenants. Those whose properties rate badly could face a lack of interested tenants and subsequent fall in rental income.
This is not just because of the green credential of prospective tenants, but about cold hard cash. The EPC not only provides details of the energy efficiency and the properties environmental impact, it also provides estimated running costs, information which will now factor in tenants' decision making process, and could be used as a bargaining tool if the home has received a poor rating.
In other words, if your property is energy-efficient, an EPC could give you an advantage over other landlords.
And if it's not, it still could pay to get an EPC now - when tenants are less aware of the scheme, and so less likely to try to negotiate based on the property's rating.
What is the point of an EPC?
While measures which could be taken to improve the property's energy efficiency and environmental impact rating are highlighted in the certificate, landlords are not obliged to make any of the changes suggested on the EPC.
How much does an EPC cost?
Nationwide subsidiary The Mortgage Works announced last week that it is offering free EPCs to landlords to help them comply with legislation.
The Lender, in conjunction with Energy Reports and Surveys Limited, will offer landlords who are remortgaging on selected products a free energy performance certificate (EPC) to show to tenants interested in renting the property. The package also includes free legal fees and a free valuation.
The National Landlords Association has also launched NLA EPCs, a new service which will provide landlords with EPCs for £69 including VAT per certificate.
And Paragon Mortgages, which is offering the certificates for £85 each, has produced an interactive guide for landlords on EPCs: `The Landlords' Guide to EPCs'.
Wait and see
Like the majority of landlords, you may intend to wait until your existing tenant leaves and you have to market your property for rent again before you get an EPC.
But there is a problem with waiting until a current tenancy is up. You may not be allowed to market your property and could therefore face void periods of one, two or three months, for example. The only way to be in a position to move quickly when one tenancy ends is to have the EPC already in place. And remember the £200 fine can be issued an unlimited number of times, not just once.
It's also important for landlords to make sure that they use an accredited Domestic Energy Assessor (DEA) - details can be found at www.epcregister.com. Property website Email4property suggests make sure you have all the information they will require ready before the DEA arrives. This includes the date of when the property was built, information on whether the property has been extended or double glazed, whether walls have been insulated etc. A full checklist of what you need can be found here.
Risky and reckless
Finally, Paragon Mortgages' survey also noted that with just one week to go, 81% of landlords hadn't obtained an EPC for any of their rental properties, with only 5% having obtained the certificates for all of the properties in their portfolio. The National Landlords Association (NLA) has said that the total amount of fines for UK landlords could exceed £500m.
A further 8% of landlords are prepared to take the risk and wait until an enforcement officer contacts them before obtaining the EPC, and a reckless 11% of respondents said they had no intention of obtaining an EPC for any of their properties. More fool them.
There is no doubt that obtaining an EPC is another regulatory hoop for landlords to jump through, in addition to the tenancy deposit schemes and HMO regulations also introduced over the last few years.
But it's not all bad. Getting a good rating with low running costs will make your property stand out to cash-strapped tenants and that could mean the difference between letting the property quickly or facing a lengthy void period. In other words, the certificate could pay for itself.
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