Impact of Energy Act 2011 on Purchasing Property to Rent

In October 2011 the Energy Bill received Royal Assent and became the Energy Act 2011.
The Act provides for a step change in the provision of energy efficiency measures to homes and businesses, and makes improvements to the framework to enable and secure low-carbon energy supplies and fair competition in the energy markets.

As part of the overall aims of the Act, it has the effect that, from April 2018, it will be unlawful to rent out business premises or residential property that does not reach a minimum energy efficiency standard, most likely with an EPC rating below E.  Any properties that fall below the required level are likely to be unmarketable, with knock-on effects on valuations and rent reviews.

It is therefore now important that buyers purchasing properties to rent out consider more carefully the rating on Energy Performance Certificate printed on sales particulars of properties they are considering purchasing.  If the energy efficiency rating is particularly low, it will be prudent for the buyer to consider the likely cost of any works required to the property (and the availability of any grants to fund such works) in order to improve the energy efficiency rating when entering into negotiations with the seller or their agents.

In addition the Act includes provisions to ensure that from April 2016, private residential landlords will be unable to refuse a tenant’s reasonable request for consent to energy efficiency improvements where a finance package, such as the Green Deal and/or the Energy Company Obligation (ECO), is available.

For further information on the issues raised in this article please contact Darren Edwards, Associate Solicitor at Bennett Griffin LLP on 01903 706971 or de@bennett-griffin.co.uk.