Buy-to-let landlords face huge bill to meet Minimum Energy Efficiency Standards

Buy-to-let landlords will have to foot a £420 million bill to comply with new energy standards.

This is according to the UK Green Building Council, which found that around 300,000 rental properties are currently significantly below the standards required by the new energy rating regime.

Cost to improve rental properties

The research suggests that it will cost around £1,400 to raise each property currently rated at F or G to the minimum E standard required.

The new energy requirements came into force on 1 April 2018 for all properties under new tenancy or renewal from that date. They will apply for all existing tenancies from 1 April 2020. Penalties of £4,000 will be applied when properties are let under the minimum E standard.

Minimum energy standards in commercial properties

There are even stiffer penalties for letting commercial properties that do not adhere to the new energy standards.

If a non-compliant property has been let for up to three months, landlords face a fine of £5,000, or 10 per cent of the property’s rateable value, whichever is higher. For non-compliant properties let for over three months, penalties rise to up to £150,000.

Worries over energy performance costs

Industry experts have suggested that landlords may struggle to pay the bills required to bring properties up to standard.

Commenting on the UK Green Building Council research, Marc Goldberg of specialist lender Together said: “At a time when their profits are being seriously squeezed following a swathe of tax and regulatory changes impacting the buy-to-let sector, landlords are feeling increasing pressure on their cashflow this year.

“While the vast majority of landlords understand that enhancing the energy efficiency of their properties will boost rental yields over the long term, unfortunately many don’t have the available cash to hand to fund the urgent home improvements that are needed.”

Are you up to speed on the minimum energy requirements? Read our guide to the Minimum Energy Efficiency Standards for everything you need to know.

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