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Consultations have recently closed on proposals for minimum energy efficiency standards for the domestic and non-domestic building sector. These proposals, focusing on the energy efficiency of the UK building stock, are part of a suite of reforms to help the UK achieve its carbon reduction targets. Given that around 18% of non-domestic properties, and one in ten domestic properties, are in the very lowest EPC bands (F or G), the proposals for minimum energy standards could make a difference.
Proposals for the private rented sector minimum energy efficiency (non-domestic) regulations for England and Wales will mean that by 1 April 2018, all eligible properties will have to be improved to a specified minimum energy efficiency standard (EPC rating E) before being let to tenants, except where certain exemptions apply.
With these proposals looming, landlords will need to start making energy efficiency improvements or disposing of very energy inefficient properties in the lead up to 2018, in order to be in compliance with the regulations when they come into force. Additionally, rent review provisions and the marketability of the property are likely to be affected by the property's energy efficiency.
Tenants should be aware that if their property is rated as being below the required energy efficiency level by 2018, then it's likely that they won't be able to assign or sublet their leases, so they will need to make sure their property conforms to the minimum energy efficiency requirements (subject to superior landlord consent).
Landlords may also wish to consider lease provisions that oblige tenants to ensure the energy efficiency of the property doesn't drop below a certain level, given the impending minimum energy efficiency requirement.
On the domestic property side, the proposed regulations have two distinct elements:
The recent consultations on these proposals for the domestic and non-domestic sector sought views on the specifics of how these proposals should work and the government response is expected in early 2015.
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