Complex legislation for private rented sector

Legislative complexity increases for private rented sector

The Minimum Energy Efficiency Standard (MEES) was introduced in March 2015 as part of the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. Originating from the Energy Act 2011, the Standard forms part of a package of energy efficiency policies designed to reduce the impact of the built environment on the UK’s carbon emissions.

From 1 April 2018, it will be unlawful for landlords to grant new property leases with an Energy Performance Certificate (EPC) rating below E, representing a significant development from the existing requirement for landlords simply to take steps to improve the energy performance of such properties.

There are exemptions, the list of which is lengthy and subject to interpretation.

This creates both challenges and opportunities for landlords, the most obvious of which are financing the upgrading of non-compliant buildings and loss of income if properties can’t be rented. Landlords can prepare now by reviewing their portfolios to determine which properties are within MEES scope.

Landlords needn’t move straight to commissioning EPCs. An Energy Performance Report (EPR) enables an energy efficiency rating to be given without a lodgement. Remedial action can then be taken and a full EPC commissioned once the property is ready for this. EPRs can be done via a data gatherer rather than a trained DEA.

The new MEES requirements will have a knock-on effect for other stakeholders in the private rental sector, with potential consequences for lenders in the event landlords are unable to make repayments due to loss of rental income and additional capital expenditure costs.

With 30 September heralding the arrival of new underwriting standards set by the Prudential Regulatory Authority (PRA), the legislative landscape of the mortgage market is set to become increasingly complex.

The new PRA standards will affect landlords with four or more mortgaged buy-to-let properties, requiring stress-testing of the entire portfolio each time landlords re-mortgage or take out a mortgage on a new property.  Lenders need to ensure they’re obtaining sufficient information on asset values, and may want to mandate that EPCs are provided on all affected properties.

eTech’s Buy-To-Let Hub has been developed to offer landlords a simplified portfolio submission process, streamlining the whole mortgage application process across the buy-to-let market.

As legislative complexity increases, the opportunities for technology to take the burden of administrative processes are considerable.

For more information about eTech’s Buy To Let Hub software or to request a demonstration, call eTech on 0333 123 1415.

For information about Domestic Energy Assessors and EPCs/EPRs visit ecmk who have a long history of assisting landlords with portfolio management.