New energy rules have an impact on landlords
Farmers and landowners with private rented property in England Wales are being reminded of new legislation which came into effect on April 1, 2018 with regard to the energy efficiency of their properties.
The domestic Minimum Energy Efficiency Standard regulations within the Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 require private landlords to ensure their properties meet a minimum energy efficiency standard of Energy Performance Certificate (EPC) Band E.
Landlords of non-domestic and domestic buildings with an energy efficiency rating of less than the minimum standard of E, which fall within the scope of the regulations, will not be able to:
• from April 1, 2018 renew existing tenancies or grant new tenancies;
• from April 1, 2020 continue to let existing domestic properties; and
• From April 1, 2023 continue to let existing non-domestic properties
Farmhouses let under the Agricultural Holdings Act 1986 or Farm Business Tenancy will be exempt from MEES but the legislation will apply in some circumstances to a farm tenancy with a sub-let cottage.
This means that potentially a farm tenant who then sub-lets a cottage to a third party on a tenancy which falls under the regulations, such as an Assured Shorthold Tenancy, will have to comply as they will be the ‘immediate’ landlord of the farm cottage and must take the necessary steps to improve the energy efficiency of their properties on the first occasion that the property is re-let after April 2018.
Again, in some circumstances there may then be scope to get the principal landlord to cover some of these costs, but cases must be looked at on an individual basis and the terms of the tenancy agreement will be critical.
There is a cap of £2,500 a landlord must spend to make the regulations as effective as possible, while protecting landlords against excessive cost burdens. With a cost-cap, domestic landlords would only need to see investment in improvements to an EPC F or G rated property up to the value of that cap.
Farmers and property owners should seek advice from their agents or contact Davis Meade Property Consultants to check if they are meeting the rules.
We are also reminding farmers and landowners that trading has begun to buy, sell or lease Basic Payment Scheme entitlements in readiness for the 2018 claim.
To maximise their 2018 claim, farmers should check that they have sufficient entitlements to match their eligible land area. Any entitlements surplus to the land area being claimed in 2018 can be traded.
The trading is based upon the exchange rate confirmed for 2017 being a euro equalling £0.89470.
Kathryn Williams, Davis Meade Property Consultants
