The new cost cap of £3,500 inc. VAT on properties that have an EPC rating below E will come into force 01st April 2019.
The minimum energy performance rating of E for private rental properties was introduced last year on 1st April 2018. This amendment to the Energy Efficiency (Private Rented Property) (England and Wales) Regulations prevented landlords renting properties that were rated F and G and applied to all renewals (including tenancies that become statutory periodic) and new tenancies that began on or after 1st April 2018. For existing tenancies, the minimum rating does not apply until 1 April 2020.
From 01st April 2019, landlords will now need to self-fund up to £3,500 inc. VAT any improvements to properties rated F and G where they have been unable to obtain third party funding in whole or in part. This means a landlord without complete or partial third-party funding must spend up to £3,500 inc. VAT to improve the rental property to a minimum E rating.
There are exemptions to this self-funding cap which a landlord may rely upon. In summary they are:
1. Where improvement works have been carried out and the property still remains rated F or G.
2. Cost of purchasing and installing the recommended measure will exceed the cost cap.
3. Wall insulation cannot or should not be installed.
4. Third party consent exemption.
5. Property devaluation exemption.
6. Temporary exemption due to recently becoming a landlord.
The Department for Business, Energy & Industrial Strategy has issued guidance on the new changes and it is recommended reading for landlords who manage properties currently rated F and G
