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Landlords & tenants potentially out of pocket as a result of new energy efficiency regulations

Lawyer calls for further reviews of incoming energy assessment measures which would result in unnecessary alterations to rental properties

30 March 2015

A leading consumer lawyer has voiced her concerns regarding new legislation, coming into effect in April 2016, which will see traditional rental properties being assessed using standards that may not be applicable for traditional dwellings, resulting in landlords doing potentially unnecessary and damaging work to their properties.

Private Rented Sector Energy Efficiency Regulations laid in Parliament this February provide that from April 2016 residential private landlords will not be able to unreasonably refuse consent to the tenant’s request for energy efficiency improvements where green deal finance or subsidies are available to pay for them.

By April 2018 landlords must ensure that their properties reach at least an 'E' EPC rating, before they can grant a tenancy to new of existing tenants.

However Bozena Michalowska-Howells, Partner in the product liability and consumer rights team, at Leigh Day warned: “Rather than providing the energy costs savings, landlords of older houses may, in a rush to comply with the regulations, be faced instead with significant repair costs, loss of rent, diminution in the value of the property and possible claims for compensation for damage to health.”

There are 22.2 million UK homes that were built pre 1919 of these 39.7% are privately rented.

Through the ‘Green Deal’, energy customers in England, Wales and Scotland may receive loans to make energy efficiency improvements.

The repayments are attached to the energy bill at a property rather than to an individual.  The interest rate charged on the Green Deal loans is around 7.5%.

In principle, instalment payments, made through the energy bill should not exceed the savings on an average bill.  It is however possible that the household energy bill savings may not only not cover the cost of the Green Deal package but may also significantly increase costs.

The Department of Energy and Climate Change (DECC) this month published a report analysing the energy performance of traditional solid wall homes in the UK in order to provide a realistic estimate of energy consumption and to quantify the potential for energy efficiency improvements such as cavity wall insulation.

The results of the study suggest, “that uninsulated walls perform better, and insulated walls perform worse than currently assumed.”

Consequently the report concluded that the effectiveness of government supported insulation programs is likely to be less than might be expected using the standard assessment procedure (SAP), the methodology, based on modern wall structures and materials, used by DECC to assess and compare the energy and environmental performance of dwellings.

The report raises concerns that at an assessment based on the current SAP ratings will not give an accurate view of the performance of the energy efficiency of a dwelling.  This means that the likely paybacks from measures such as cavity wall installation may be less than assumed.

Landlords therefore may be undertaking works, to comply with the private rented sector regulations, that will not provide the anticipated energy savings.  This coupled with the not insignificant interest rate charged on green deal finance, may leave tenants facing larger fuel bills.

There is also a lack of advice and information available to homeowners and landlords in relation to traditional buildings and a lack of skilled assessors and installers. 

Therefore a significant risk exists of measures being implemented that not only will be unsuccessful but may also be damaging to the property.

Unintended consequences can include a risk to the fabric of the building including excessive levels of moisture from damp and condensation which if not treated may lead to the deterioration of the structure of the building; including dry rot and attacks by wood boring insects. 

Continued damp and condensation will not only make a house unpleasant to live in but mould growth can present serious health issues which can render a house uninhabitable.

Bozena Michalowska-Howells at Leigh Day concluded;

“Further research must be done into the energy performance of traditional dwellings and what are in fact appropriate methods of assessing it.

“Proper independent regulation of the industry to ensure that installers and assessors have adequate expertise must be also be implemented, before landlords are required to take steps such as installing cavity wall insulation, that is neither necessary or effective, and could be potentially damaging. “

Landlords and homeowners who have suffered damage as a result of inappropriately installed cavity and solid wall insulation are entitled to seek compensation not only for the repair and redecoration costs but also compensation for loss of rental, inconvenience and damage to health.

Information was correct at time of publishing. See terms and conditions for further details.

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