Residential tenants gain right to make energy efficiency improvements
On 1 April 2016 many residential tenants gained the right to ask for their landlord’s consent to make energy efficiency improvements to their rented home, under Part 2 of the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.
The regulations set out precise rules for tenants who want to take advantage of the scheme, and for their landlords who must comply with strict time limits when responding.
Rights for tenants
A tenant who wants to make use of the scheme must first check that both their tenancy and their proposed improvements are within its scope. With a few exceptions, the regulations apply to tenants of private rented property under assured and assured shorthold tenancies, Rent Act-regulated tenancies and some agricultural tenancies. Owners of leasehold properties who sublet to others on these types of tenancies can also take advantage of the scheme.
The 45 energy efficiency improvements covered by the scheme are set out in a list that originally formed the basis of the government’s Green Deal. They cover a wide range of works and installations, from heat pumps to insulation.
The tenant must show how the improvements will be funded; the landlord is not expected to pay for them. There are several possible sources of third-party funding, although no new Green Deal finance is available. Tenants may also pay for all or part of the work themselves, although it is not clear what evidence landlords can require to satisfy themselves that the tenant has sufficient funds.
Obligations for landlords
The obligations on landlords who receive tenant requests are complex and involve strict time limits so landlords will need to take legal advice early on in the process. A landlord who receives a valid request from their tenant under the scheme must not unreasonably refuse consent. This also applies to the superior landlord of a leaseholder who receives a valid request from their own tenant.
The regulations set out a number of situations in which it would be reasonable to refuse consent, including two exemptions:
- The first relates to consent. If the improvement the tenant wants to make requires third-party consent, such as planning permission, the landlord may refuse if it is not possible to get that consent. The downside for landlords is that they must make reasonable efforts to get any such consent if they receive a tenant request, and they cannot pass on any costs incurred in doing so to the tenant, even if consent is refused.
- The other exemption relates to devaluation. If the landlord can show that the work would reduce the market value of the property by more than 5 per cent, it is reasonable to refuse consent. Again, getting to this point will involve landlords in extra expense, because they will need an independent valuation, the cost of which cannot be recovered from the tenant.
If a landlord does not want their tenant to make improvements but cannot find a reasonable ground to refuse consent, there are two alternatives. The landlord can either agree to carry out the works or they can make a counter-proposal for different energy efficiency improvements that would deliver substantially the same energy bill savings as the improvements proposed by the tenant. The tenant must then confirm whether or not they consent to the landlord’s counter-proposal; and the tenant’s original request is no longer valid.
Retaining control of the work may appeal to landlords but the improvements must be done within six months, which may be difficult to achieve. The other practical issue is how a landlord can be sure the tenant will pay for work the landlord carries out under a counter-proposal, where there is no third-party funding. The regulations are silent on this and this could lead to a landlord and tenant dispute. The landlord may also incur irrecoverable costs, for example, in getting planning permission or the consent of a superior landlord.
Landlords now face the prospect of managing work being done to their properties by a number of different tenants, while complying with detailed rules and some very tight timetables.
For more information on energy efficiency rules, or any other housing law problem, call us on 0207 426 0400.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.