Farmers – are you on top of your EPC obligations?

It is common for farmers to supplement their incomes by renting out buildings on their land. All well and good, but in April 2020 new rules were introduced making it illegal, subject to some exemptions, to let a private rented property with an energy performance certificate (EPC) rating of less than E.

So, what are the implications of this for farmers and are there any exemptions that they can take advantage of? Andrew Little, agricultural law specialist at Ware & Kay in York & Wetherby, reports.

The Minimum Energy Efficiency Standards (MEES), under which an EPC is assessed, require anyone with a private rented property with a rating of F or G to undertake improvements to bring it up to an E rating before they can rent it out.

The rules only usually apply to buildings which are heated or cooled, which many farm buildings are not. However, if you want to let out a large storage unit, for example, which contains a toilet, office or kitchenette, an EPC may be required. 

EPCs are valid for ten years.  You only need renew it if you sell the property or let it out to a new tenant. Tenants of qualifying properties must be given a copy of the EPC when the tenancy is set up. Penalties for EPC breaches include a fine of £5,000.

The rules apply to assured shorthold tenancies, assured tenancies and assured agricultural occupancies under the Housing Act 1988 and Rent (Agriculture) Act 1976. 

If a farmhouse or cottage has been rented by a tenant since before 1 October 2008, an EPC is not required. This would include some Agricultural Holdings Act 1986 tenancies. However, an EPC will be required if someone takes over the tenancy. 

Farm business tenancies should not currently require an EPC, but if a property is sublet by a farm tenant as an assured shorthold tenancy, an EPC will be needed.

If you let out rooms in a property with shared facilities to multiple tenants on individual tenancy agreements – for example to farm workers as part of their employment – this would constitute a ‘house in multiple occupation’. You do not need an EPC for each room but the property itself is likely to need an EPC.

Other exemptions which apply to private rented property include:

• listed buildings if the minimum energy performance requirements would ‘unacceptably alter their character or appearance’;
• properties let out for less than four months a year;
• where the cheapest recommended improvements to bring the property up to the E rating standard would cost more than £3,500 (inc. VAT);
• if you have made all the ‘relevant energy efficiency improvements’ for the property (or none can be made) and the property remains sub-standard;
• where recommended wall installation would negatively affect the fabric or structure of the property;
• where the required measures would reduce the market value of the property by more than five per cent;
• where third party consent, such as a planning, superior landlord or mortgagee consent, would be required by cannot be obtained;
• where a recommended improvement would cost more than the savings on energy bills over seven-year period (for non-domestic property only).

All exemptions must be registered on the National Private Rented Sector Exemptions Register and last for five years. If you sell the property, the new owner will have to apply for their own exemption.

Note: the government has announced plans to tighten EPC rules to require all newly rented properties to have a minimum EPC rating of C from 2025. The new requirement for existing tenancies will apply from 2028. Fines for breaches will also rise to £30,000.

For more information about renting out buildings on your land or advice on EPC regulations for agricultural buildings, please contact Andrew Little on York 01904 716000, Wetherby 01653 692247 or Malton 01653 692247 or email andrew.little@warekay.co.uk to see how we can assist.