New energy efficiency legislation will affect private rental sector
Landlords with poorly insulated properties may not be able to put them on the market from April 2020 onwards – and the energy performance criteria will be stricter every year until 2025.
On 1 April 2020, Scottish landlords will no longer be allowed to grant new tenancies for properties with EPC (Energy Performance Certificate) ratings of F and G. The regulations will eventually affect let properties with EPC rating poorer than D. The aim of The Energy Efficiency (Private Rented Property) (Scotland) Regulations 2019 is to improve the overall energy efficiency of the private rental sector in Scotland by:
- lowering demand for energy in residential lettings,
- improving property conditions,
- lowering property running costs.
The above mentioned regulations apply to all privately rented properties, managed both by letting agents and individual landlords.
Important cut-off dates
There are a few cut-off dates between 2020 and 2025. 1 April 2020 – no new tenancies for properties with EPC ratings of F and G. It means that the new legislation will apply on change of tenancy. 31 March 2022 – EPC E will become a minimum rating for all tenancies. It means that landlords will have to improve the EPC rating, even if their property is already tenanted. 1 April 2022 – no new tenancies for properties with EPC ratings of E, F or G. EPC D becomes the minimum standard at change of tenancy. 31 March 2025 – EPCD minimum rating will apply to all privately rented properties in Scotland.
Local authorities, i.e. councils, will be tasked with enforcing minimum EPC standards.
How to read EPCs:
- replacing single glazed windows with double glazed units,
- replacing electric heaters with a combi boiler and gas central heating system,
- mineral wool loft insulation,
- suspended floor insulation,
- low energy lights,
- internal, external or cavity wall insulation,
- ceiling insulation (at least 50mm insulation panels).
This is an example of a very poor EPC property. Estimated energy cost for 3 years are over £7 thousand. Please note that the same cost for similar 2 bedroom property in Edinburgh – EPC band B used as a default image- is only £948, over 7 times cheaper. Good EPC makes a difference! The savings amount to around £2 thousand a year.
What if EPC improvement is not possible?
Local authorities will be able to grant exemptions from the legislation. Some examples are:
- improvements may not be allowed in listed buildings and properties in conservation areas,
- where the cost of improvement to band E exceeds £5,000 and subsequently, where the cost of improvement from band E to D exceeds another £5,000 (thus £10,000 in total),
- if tenants refuse access,
- in block of flats – if other owners do not agree to carry out works to common parts of the building (like external wall insulation).