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Energy Efficiency Improvements

Tenant’s Energy Efficiency Improvements

From 1 April 2016 a tenant is allowed to reasonably ask for a relevant energy efficiency improvement. A relevant improvement will only be a reasonable if it–

  • can be wholly financed, at no cost to the landlord, by means of funding provided by central government, a local authority or any other person,
  • can be wholly funded by the tenant, or
  • can be financed by a combination of those two arrangements

A request must be in writing and may be given by post.

When a landlord receives a request, a landlord will only be able to refuse consent on limited grounds. But, because a request is only “relevant” if it is of no cost to the landlord this shouldn’t be too much of an issue. A landlord may fund improvements if they prefer.

A landlord needs to provide an “initial response” within one month of service of the tenant’s request and there are provisions available where consent is required from a superior landlord. It is possible for a landlord to also serve a “counter proposal” which specifies an alternative (or multiple alternatives).

There will be a few exemptions from having to carry out improvements such as if the works would reduce the market value of the property by more than 5% or consent from a third party has been refused.

An application to the First-tier Tribunal can be made to determine any disputes that may arise.

Minimum Level Of Energy Efficiency

From 1 April 2018, all rented property (both domestic and non-domestic) which is to have a new tenancy must have an EPC rating of at least “E”.

This requirement also applies to all renewal tenancies to the same tenant for the same property on or after 1 April 2018. The duty is also triggered by any periodic tenancy arising on or after 1 April 2018 after expiry of any fixed term because the duty is not only triggered by a renewal but also “an extension”.

From 1 April 2020, all domestic property (including existing tenancies) must have the minimum E rating. Non-domestic properties have until 1 April 2023 (including existing tenancies) to ensure they meet the E rating.

There are a number of exemptions for the minimum standard where-

  • the property is unable to be brought up to the standard
  • the tenant refuses consent
  • the landlord is unable to obtain consent from a third party
  • works required to bring the property up to the “E” level would devalue the property by more than 5% of market value

Where a domestic property has been let which does not meet the minimum standard, the tenancy remains valid between the landlord and tenant but a fine will be payable by the landlord of up to £5,000. Fines can be much greater for non-domestic properties depending on their size.

Green Deal

The Government has decided to stop funding the Green Deal Finance Company (GDFC) which was set up to lend money to Green Deal providers. As a result, only existing green deal plans will continue and new energy improvements through this route are unlikely (the legislation still exists to provide Green Deal).

The Green Deal allowed for energy efficiency improvements to be made and the cost of those improvements would be paid for through the electricity bill. Commonly this was paid for by tenants because they are the electricity bill payer in many cases.

The Green Deal had a “golden rule” which said that any instalment added onto the electricity bill must not exceed the savings being made by the improvements. This effectively meant the improvements were free of charge and once paid for, the savings would begin. There were other factors to be considered under the golden rule such as the expected life of any energy efficiency improvement made.

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