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EPC's and Landlords

1/1/2011 12:00:00 AM

From 1st October 2008 all landlords are required by law to provide an Energy Performance Certificate (EPC) whenever a domestic or commercial building is rented out. The regulations state that a prospective tenant should be provided with an EPC at the earliest opportunity and certainly prior to entering into any contract to rent out a property. A landlord will not need to obtain a certificate where an existing tenancy is simply being renewed, nor is a certificate required when a tenant rents only a room and shares the main facilities. 

The EPC must be obtained from a qualified energy assessor and looks similar to the certificates issued with washing machines and other electrical equipment. An A-rated property is the most energy-efficient while a G-rated is the least energy-efficient, with an average property in the UK currently being around the D or E band.  An EPC will also include recommendations for improving the energy efficiency of the building and once obtained it is valid for ten years unless changes are made to the property that affects its energy efficiency. The bad news for landlords is that it is the landlord who has to bear the cost of the EPC and this cost cannot be passed on to the tenant, for example by way of a service charge.  So far it appears that those landlords with the most efficient buildings have not benefited from an increased rental income as a consequence of this being reflected in the EPC. However, the introduction of EPCs has given tenants much more scope to argue for a reduction in rent where the building has a poor energy rating.

Some landlords of multi-occupancy premises such as flats have also reported that it is more economically viable for them to have all of their properties assessed on a discounted basis rather than pay for each individual property to be assessed as and when they are required.  In addition, where one landlord owns a building with a common heating system or owns several similar units within the same block, one certificate may be required for all of the units rather than obtaining a separate certificate for each separate unit.

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