Minimum Energy Efficiency Standards are coming into force on 1 April 2018. With this deadline fast approaching here is a reminder of the issues from a lender's perspective.
The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 provide that from 1 April 2018 it will be unlawful to grant a new tenancy of a property with an EPC rating which is lower than E (known as a sub-standard property). While there are exemptions, landlords can only take advantage of an exemption if it has been validly registered on the PRS Exemptions Register.
From 1 April 2020 it will be unlawful to continue to let a sub-standard domestic property (including buy-to-let), with the same prohibition applying from 1 April 2023 to sub-standard non-domestic properties.
There are a number of factors for lenders to consider. While lenders will not want to make their products uncompetitive they do need to assess the risks involved of lending to customers who purchase property under a buy to let product where that property has an EPC rating of below E.
Is the EPC rating of a property currently a consideration in deciding whether to lend? If not, should it be?
What is the potential impact of lending on buy to let property without a consideration of the EPC rating? Considerations should include –
Where a rating of below E is identified, should the customer be required to carry out the work prior to completion or is it acceptable for it to be completed pursuant to an undertaking?
The enforcement regime provides for landlords to be fined and publicly named. We do not believe that lenders will be liable to any penalties unless they have gone into possession and granted a tenancy of a sub-standard property themselves.
Visit the MEES hub on our website for further information and a quiz on how any specific property is going to be affected.
The government has announced that by 2030 it may be unlawful to continue to let a non-domestic property with an EPC rating of below B. This announcement comes as part of the government's package of measures to reduce...