The Courier & Advertiser (Fife Edition)
Energy efficiency and lets
The technological advances witnessed in Scotland over the last 50 years have seen farm efficiencies improve and the number of farm workers decline. The accommodation built in the late 20th Century to house the many farm labourers has for many years been surplus to requirements and in many situations the properties have been let out. Given the uncertainties of what the future holds for agriculture postBrexit, alternative income streams are to be embraced and developed.
In the last five years, the residential let sector has witnessed many changes.
Of particular note is the introduction of the Private Residential Tenancy (PRT) in December last year.
Tenant Deposits, Energy Performance Certificate (EPC) bandings and landlord registration are some of the other recent introductions.
The provision of EPCs for let residential properties has been a requirement for a number of years and the certificates must be available for inspection by all potential tenants and are detailed on letting adverts.
The EPC is a summary of how energy efficient a property is, with banding from A (very efficient) to G (very inefficient).
This is a useful tool for landlords and tenants as it shows the estimated likely cost of heating the property and what improvements can be made to improve the energy efficiency. Up until now, a minimum standard had not been set. That is about to change.
The Scottish Government has recently announced new proposals regarding energy efficiency measures for let residential properties.
They have set out an Energy Efficient Scotland Route Map, with ambitious targets to improve efficiency and reduce greenhouse gas emissions and fuel poverty.
In the short term, new regulations are due to come into force impacting on new and existing residential tenancies.
For existing tenancies: All properties must be a Band E or above by March 31 2022 and must be a Band D or above, by March 31 2025
For new tenancies: All properties must be Band E or above by April 1 2020 and must be a Band D or above, by April 1 2022
As a result, there is a risk that legally, it may not be possible to let some residential properties following the above dates. These requirements may be a headache for rural landlords.
From our experience, traditional built rural properties tend to correlate with a low EPC rating. Stone and slate farmhouses and cottages often receive a low banding.
With some improvements to heating systems and the installation of double glazing, EPC efficiency can improve, however, it may be challenging to achieve a Band D or better without substantial investment.
There has been discussion about the introduction of a proposed spending cap; lets would be permitted in properties with a lower than minimum EPC rating where the landlord had spent a certain sum of money on energy efficient improvements.
Grants and interest-free loans may also be available to assist with the financing of improvements.
We would recommend that landlords continue to undertake routine maintenance as normal, but keep energy performance in mind, making low-cost improvements to increase energy efficiency now and budgeting for larger improvements when the spending cap has been clarified.
The work required to achieve an improved EPC banding is likely not only to be costly to the landlord but could also prove to be obtrusive for the tenant. To avoid such disturbance, it may be sensible to undertake improvements at change of tenancy.
While some of the finer details are still to be confirmed, it is important to understand the likely investment required to achieve minimum standards – and gauge if they are at all possible. We recommend undertaking a review of all existing EPC certificates for all let properties, obtaining new ones where necessary and preparing for improvements when needed.