In April 2018, buy-to-let landlords were required to meet new Minimum Energy Efficiency Standards (MEES) with a minimum rating of E, before they could rent out property, unless the building qualified as exempt.

However, whilst 2018 heralded an initial change in the rules regarding energy efficiency standards, the bigger picture will see regulations that affect all rental properties, irrespective of the length of tenancy, in April 2020.

In simple terms, if you own a rental a property that fails to comply with the new efficiency test criteria, you will not be able to rent it out to tenants and could also incur fines of up to £5,000.

The April 1st, 2018 deadline did not automatically apply to all landlords, depending on the type of tenancy in place.

However, the rules state that from April 2020, all existing lets will also need to meet the MEES requirements, meaning all rental properties will have to have an EPC rating of E or above. Even if the tenancy is already running, from April 2020 the property will need to meet these standards.

Alarmingly, in April 2017, Landlord Today ran a story indicating that 25% of landlords were unaware of the requirements under the new MEES regulations, while 42% admitted to being “only vaguely aware”.

The story reported that 27% of landlords asked, did not even know the EPC rating of their property to begin with.

In October 2017, AXA reported that one in 20 properties still fell below minimum standards, with the knock-on effect that tenants were overpaying on their energy bills to the tune of an estimated £13 million each month.

“When we look at our surveys of tenants and landlords over the past five years, we see progress across the board on security, maintenance and numbers with proper tenancy agreements in place,” stated Gareth Howell, managing director of AXA Direct.

“They (landlords) are, by and large, professionalising and investing more seriously in their tenants’ comfort and the future health of their rental properties. Pockets of failure exist in this market, but it is not the story for the vast majority,” he suggested.

In June 2017, Knight Frank predicted that nearly one in four households in the UK will be renting privately by the end of 2021 as soaring house prices and stagnant wages put home ownership out of the reach of growing numbers of people.

At present, according to The Guardian, there are around five million homes, which equates to 21% of the total, which are private rental, with a quarter  of these rented by families with children.

Knight Frank has predicted that this will increase to 5.79 million (24%) in the next five years.

With rental demand already at an all-time high and outstripping existing demand, the 2020 deadline for landlords to meet MEES could be a ticking time bomb for a housing market already at full stretch.

There may be a number of financing options available to fund the necessary improvements and this is where an experienced, specialist buy to let broker like Commercial Trust Limited can play an integral role.

We work with over 45 lenders, sourcing not only buy to let mortgages but specialist finance products such as second charges and bridging loans, depending on your personal circumstances and what is most appropriate for your needs.

If EPC ratings is an issue you need to address before April 2020 and you are unsure of how to finance the required renovations, get in touch.

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Daniel Peacock

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