The current Energy Performance Certificate (“EPC”) requirements are set out in regulations from 2008, and provide information on how energy efficient a building is—essentially a rating from A-G. The EPC regulations require that any building which is to be sold or let privately must have a valid EPC. New legislation is awaited which will introduce minimum standards for energy efficiency within the private rented sector based on EPC ratings.
The EPC regulations only affect those tenant farmers who have residential property within their tenancy. Generally, the farmhouse within an agricultural tenancy in which the tenant farmer lives will not be required to meet minimum energy standards until 2027 (when any residential property included in new agricultural tenancies will be required to meet higher standards which the landlord will be obliged to provide). Where there are residential properties included in the tenancy which are sub-let by the tenant farmer to third parties, an EPC will be required, and depending on the start date of the sub-let there will be a requirement for the property to meet a certain standard of energy efficiency.
There are several exceptions and exemptions to the requirement to have a valid EPC, and exceptions and exemptions are expected in respect of private lets meeting the minimum standard for energy efficiency. It is worth noting that the EPC regulations do not apply to holiday lets. The situations where an exemption will apply include where:
- All energy efficient improvements have been made;
- There is a lack of consent from the tenant in the let (or sub-let) property; or
- The costs of the improvements exceed the cost cap (which is calculated as £5,000 per banding, so in order to get from an F – E rating, the cap is £5,000, and from an E – D rating there is a further £5,000 cap) .
These exemptions only apply for 5 years, after which the position must be reassessed.
There are financial penalties which can be imposed by the local authority where properties are let (or sub-let) but not compliant to a maximum of £5,000. We would recommend that you seek guidance from a lawyer in advance of the regulations coming into force to ensure you are prepared.
*This article featured in the July edition of Farming Leader.