Out of Energy

Energy efficiency is something we all strive for. Making the most of what we’ve got and hanging on to it for grim life.

The same is true when it comes to property. In April 2018 the law changed to bring a new requirement for any property rented out in the private rented sector to have a minimum energy performance rating of ‘E’ on an Energy Performance Certificate (EPC). By April 2020, it will be unlawful to rent any property which breaches the requirement for a minimum E rating, with fines of up to £4,000 being threatened. Despite the hype, few investors seem to be aware of the fact.

Most of the housing stock is rated C – D, and the purpose behind the change is well intentioned. It harps back to the old ‘decent standards’ initiatives from years gone by, for those old enough to remember. But a house that is currently hovering at ‘E’ can easily drift into an ‘F’ or a ‘G’ when it is next assessed, and certificates are only valid for 10 years.

What is happening, therefore, is large number of ‘E’ rated properties are being dumped on the market at a cheap price for a quick sale, in the knowledge that properties that are older or under-invested are not likely to satisfy the new requirements when they next come to be certificated.

Buyers will therefore have to spend large sums to bring their properties up to spec, and with the rising costs of insulation materials coupled with the challenges of bringing early 20th Century buildings into the modern age, those costs could be substantial.

So the moral of the story? If the price of a property seems too good to be true, it almost certainly is!