Occasional jottings about
everything and nothing much!
This blog will be written when I have something to say, so there may be times when it will not have been updated for a while, but at least it won’t end up like some pop star’s Twitterings.
ARE YOU REALLY READY FOR 2018?
26 June 2018
We will all no doubt have had worried clients asking us where things stand as far as the introduction of ‘minimum energy standards’ in 2018 is concerned (even before the Brexit result). Clients certainly have a right to be worried. Is this legislation still definitely going to take effect on 1 April 2018? How are building owners going to fund improvements to their premises with no Green Deal to meet the costs?
With less than two years to go you might hope that the Department of Energy and Climate Change would be giving landlords and agents some guidance on the requirements. An online pamphlet maybe? Letters to landlords’ associations? Obviously not, so it’s being left to us to give our clients what guidance we can.
While I was doing this recently with an agent who has been a regular since he became my first client back in 2008, it occurred to me that what I was saying must all have sounded pretty negative.
Yes, there was talk of a new Green Deal. Yes, DECC had said there would be a consultation on something in the autumn (which isn’t too far away now). But no, I couldn’t tell him exactly what the consultation would be on. A new version of Green Deal? Hopefully, but I couldn’t say for sure. And no, I couldn’t say with any certainty that the 2018 banning of letting of ‘F’ and ‘G’ rated properties was on course to be introduced, especially since the 1 April 2016 introduction of the tenant’s right to demand energy efficiency improvements was rendered completely ineffective by the scrapping of Green Deal finance last July.
OK, if DECC don’t tell us anything we can’t tell our clients what’s going on. But it occurred to me afterwards that I wasn’t helping my client by being negative and equivocal. What is he going to tell his clients? That he doesn’t know what’s happening and they’ll have to wait until some unspecified future date to – hopefully – find out what is going on? That’s hardly going to make him look good!
So what else could I have done? I could and should have taken a much more positive approach, which would have helped him, and might also have won me more business.
I should have told him that the regulations will come into force on 1 April 2018 requiring improvement of ‘F’ and ‘G’ rated properties for new lets and renewal of tenancies, and for all domestic rented properties on 1 April 2020 and all non domestic rented properties on 1 April 2023. Until Government makes some change to the legislation that is the position, and I should have made it clear.
I should have told him that his clients should be taking steps now to take legal advice on their position, or at least start by familiarising themselves with the legal requirements from the mass of material online – there is an excellent summary on the situation for domestic properties on the Residential Landlords Association website at http://www.rla.org.uk/landlord/guides/minimum-energy-efficiency-standards.shtml
I should also have urged him and his clients to start drawing up a schedule of which properties need improvement prior to April 2018, and when work to improve them can be done.
I should have pointed out that the penalties for non-compliance are severe – the penalty for three months non-compliance for non domestic properties could be 20% of rateable value, ranging from a minimum of £5,000 up to a maximum of £150,000.
I should certainly have told him, as I did, about what is happening on potential Green Deal funding to support landlords in improving properties, but I should have made clear that landlords perhaps ought to be considering what they will do if that isn’t available.
I should certainly have been stressing the positive value to tenants and landlords of carrying out improvements. I should have been pointing out the average fuel cost of an ‘E’ rated property compared to a ‘G’ rated property, which research* suggests could produce a saving of almost £500 a year. That should be a selling point for any landlord letting a property but it mostly isn’t, probably because landlords don’t have that information. We should be giving it to them and making sure they appreciate the value of it.
And I should have been stressing the importance of the services I can offer to clients now. Encouraging landlords to put off doing anything is not doing them any favours, and could leave them in real trouble if they find themselves without sufficient time left to carry out necessary improvements.
You may already be doing much better at this than me – frankly you couldn’t be doing much worse! It’s easy to get into a pessimistic mindset with some of the setbacks our industry has experienced in the past year, but my dissatisfaction with my client advice made me realise that I need to be making a real effort to think positively! Our clients can probably manage to get depressed without our help, and what they need from us is clear, simple, straightforward advice – what the situation is; what needs to be done and when.
You may want to go further than the few simple points I’ve jotted down above (while making clear that we’re not qualified to give legal advice!) but if you are thinking positively about the challenges and opportunities for your clients, and stressing how you can help overcome them, then maybe you really are ready for 2018.