Tenants Right to request consent to energy efficiency improvementsV1-JC-18032015

Energy Performance Certificates

Introduction

With effect from 1st April 2016 tenants will be able to request consent from their landlords to carry out energy efficiency improvements to privately rented properties. The landlord will not be able to unreasonably refuse consent. It will, however, be the responsibility of the tenants to ensure that the works are funded and the intention is that no upfront costs should fall on the landlord, unless the landlord agrees to contribute. There are separate regulations requiring properties to be brought up to an E rating on an Energy Performance Certificate (EPC) which are effective from the 1st April 2018. Click here for more information.

Scope - when can a tenant request consent to energy efficiency improvements?

The regulations apply to the domestic private rented sector in England and Wales. This means: -

  • Properties let under an assured tenancy or a tenancy or shorthold which is a regulated tenancy for the purposes of the Rent Act 1977.
  • Properties let (a) on a tenancy which is an assured agricultural occupancy (b) on a protected tenancy within the meaning given in the Rent (Agricultural) Act 1976, or (c) on a statutory tenancy within the meaning of the Act.

Any property within the definition of a domestic privately rented property is within the scope of the tenant's rights regulations, regardless of whether the property has an EPC at the time of the tenant making a request. However, where a building would not be within the scope of the EPC regulations, a landlord would not be required to provide consent to improvements. Such situations include where the building has the required and evidenced permissions for demolition; or where the building is a temporary structure with an evidenced and planned time of use of two years or less.

Improvements covered

This means any energy efficiency improvement which qualifies for the Green Deal and it also extends to installing a gas supply in an off gas property where the mains are within 23 metres from the property.

Nature of the request

The request is for the landlord to give consent to the carrying out of specified works. This extends not just to the immediate landlord but also, in the case of leasehold properties, to a superior landlord as well as the freeholder. Consent must not be unreasonably refused by any of them. Consent is widely defined so that it is not just for permission under the terms of a tenancy agreement, e.g. a consent to alterations clause, but it can extend to asking for a right to carry out work, e.g. work outside the boundaries of the property which is let. This is particularly important in the case of a block of flats.

The tenant's request process

The process is as follows:-

  • A tenant will be able to request consent to install energy efficiency measures at a property as long as - (i) the measure is one of the energy efficiency measures listed in the Schedule to the Green Deal (Qualifying Energy Improvements) Order 2012, or is a measure to be installed in order to connect to the gas network; and (ii) the tenant has a way of funding the measure at no cost to the landlord (e.g. by using Green Deal finance or future equivalent, government grants or incentives, ECO, other grant funding from third parties or local authorities, or paying for the measures themselves).
  • An EPC, surveyors report or Green Deal Advice Report (GDAR) is not required under these regulations, but may be required should the tenant wish to make use of Government funding, or ECO.
  • Where a tenant does not provide an EPC, surveyors report or GDAR as part of the tenant request, the landlord would have grounds for refusing consent if they had advice(e.g. from a surveyor's report, or from a GDAR) that the measure was not suitable for the property.
  • For a request to be valid, the tenant must specify and provide details of the energy efficiency measure(s) they wish to install, and provide written evidence to the landlord of either (i) any Green Deal Finance Plan or future equivalent, demonstrating that the package is fully funded, through Green Deal finance and/or ECO, grant or tenant funding, or (ii) where works are proposed to be paid for without Green Deal Finance, the tenant must provide evidence of quotes for the improvements from an authorised Green Deal installer or installer who meets relevant installer standards.
  • Landlords are able to propose a counter offer where the energy efficiency improvements would deliver the same, or substantially the same, savings on the energy bills as was specified in the tenant's request. In addition, the energy efficiency improvements specified in the counter proposal must not result in an initial, or a continuing, cost to the tenant which exceeds the cost of all the relevant energy efficiency improvements specified in the request.

The end of Green Deal Finance

Due to low take up and concerns over industry standards, the government announced the end of funding for the Green Deal Home Improvement Fund in June 2015. A replacement for this scheme was promised at the time after consultation with industry and consumers but details have not been announced and progress appears to be slow. It is not expected until 2017 at this point.

The lack of Green Deal Finance obviously makes it more difficult for tenants to fund energy efficiency improvements. However, they can still attain funding through projects such as ECO or local government grants.

Cases where the landlord does not need to consider the request

The landlord or superior landlord can refuse consent where -

  • Despite reasonable efforts any third party consent is being refused or granted subject to a condition with which the landlord or superior landlord cannot reasonably comply.
  • The improvement will result in a reduction of more than 5% of the market value of the property (or the building of which it forms part) as evidence in a report by an independent surveyor.
  • Within the six months previous the landlord has received a request for consent from another tenant and the landlord complied with the requirements in relation to that request.
  • A written opinion has been obtained from a surveyor or an independent installer that it would not be beneficial for it to be installed due to its potential negative effect on the property, the core structure of the property or the building of which it forms part.

Cases where a tenant cannot make a request

A landlord can ignore a request in the following circumstances:-

  • Where, within the previous six months, the landlord has sought the tenants consent for the making of the improvements in question and the tenant refused consent (including consent required under the Green Deal framework).
  • After the tenant has served notice to end the tenancy.
  • Where within three months before the expiry of the fixed term tenancy the tenant has notified the landlord that the tenant intends to vacate the property at the expiry of the tenancy.
  • Where the landlord has served notice under Section 8 or Section 21 of the Housing Act or a notice to quit to end the tenancy and possession proceedings may be brought in reliance of a notice.
  • The landlord has commenced proceedings against the tenant for possession but the proceedings are outstanding or the Court has made a possession order.
  • Where the tenant has within the previous six months arranged for improvements to be made to the property under the Green Deal.

Funding for energy efficiency measures

The tenant would seek funding to cover the cost of any relevant energy efficiency improvements through one or more of the following sources: (i) Green Deal Finance Plan or future equivalent; (ii) the Energy Company Obligation or similar future scheme, (iii) grant, for example, from a local authority, devolved administration or national Government; or funding from the tenant's own sources should the tenant choose this option. The landlord may also wish to part fund the measures, but this would be at their discretion. Landlords would not be required to provide consent to improvements that entail an upfront or net cost.

Reasonable refusal

  • There are specific instances where a landlord could reasonably refuse consent. Landlords may also refuse consent where the particular circumstances of the case mean that it would be reasonable to do so.
  • Where a tenant feels that a landlord's reason for refusal was unreasonable, it would be for the tenant to take the landlord to a tribunal which would ultimately rule on a case by case basis.
  • The regulations will place both immediate landlords and any superior landlords under a duty not to unreasonably refuse consent to requests for energy efficiency measures. Private rented sector landlords, who are themselves leaseholders, will be empowered to make request for consent to energy efficiency improvements from the freeholder/superior landlord.

Housing Health and Safety Rating System (HHSRS)

  • Where a landlord or superior landlord has been served a notice under HHSRS, the landlord will need to notify the tenant of this, and the tenant's request cannot proceed until the landlord has dealt with the HHSRS notice. The tenant's request ceases to have an effect.

Timing

  • Landlords would need to provide a response to a tenant's request within one month. This response would confirm that:
    • Consent is given (where no additional consent is needed or any required third party consent has already been obtained); or
    • Consent is refused and the reason provided; or
    • Consent will be given subject to obtaining third party consent (planning consents, freeholder consent etc), giving the landlord up to a further two months to obtain the third party consent; or
    • Consent will be given subject to obtaining expert advice about the suitability of the requested measure for the property, or a potential devaluation as a result of installing the measure, giving the landlord up to a further two months to obtain the expert advice; or
    • A counter proposal is provided, giving the landlord up to a further three months to provide full details of the counter proposal.

What is not clear is whether the landlord can attach conditions to the consent.

Implementation date for regulations

  • A tenant will be able to request consent to energy efficiency measures from their landlord from 1 April 2016. From this date all domestic tenants in scope of the regulations are afforded with this right to request consent for energy efficiency improvements under the regulations.

Enforcement and Applications to the First Tier Tribunal

  • The First Tier Tribunal General Regulatory Chamber will hear and determine applications from tenants where the tenant considers that the landlord has not complied with the regulations.

Further reading and guidance

The Department of Energy and Climate Change has prepared more detailed guidance on this. It is available to read here

Landlord & Investment Show
Martin Co
Envirovent
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