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How will the Energy Act affect you?

The Energy Bill received Royal Assent in October, bringing the Energy Act 2011 into force.

The new Act, which came into force on 18 October, paves the way for some of the key elements of the coalition’s programme for government. The Department of Energy and Climate Change (DECC) says the Act “provides for a step change in the provision of energy efficiency measures to homes and businesses”, introducing the first Annual Energy Statement and aiming to facilitate low-carbon energy supplies and promote fair competition in the energy markets.

There are a number of key measures included in the new Act. The introduction of the Green Deal launches a new financing framework designed to enable provision of fixed improvements to energy efficiency of commercial and residential property, funded by a charge against energy bills rather than an upfront cost.

A new Energy Company Obligation will take over from existing obligations to reduce carbon emissions - the Carbon Emissions Reduction Target (CERT) and the Community Energy saving Programme (CESP) which expire at the end of 2012.

The Energy Act also includes provisions that will affect the private rented sector – both residential and commercial. From April 2016, private residential landlords will be unable to refuse a tenant’s reasonable request for consent to energy efficiency improvements to a property, where a finance package such as the Green Deal and/or the Energy Company Obilgation is available.

Also from April 2018, it will be against the law to rent out either residential or commercial premises where a minimum energy efficiency standard has not been achieved. The rating that premises will have to meet has not yet been confirmed but the DECC suggests that this is likely to be EPC rating ‘E’. Once this provision comes into force, landlords will not be able to let that property until appropriate certain energy efficiency improvements have been made. This means that landlords of buildings that are currently rated ‘F’ have some time to make the necessary improvements. However, it is important to note that 1 April 2018 is a long-stop date and the rule could be applied earlier than this.

For property advisers carrying out EPCs, it is important that they make clients aware of situations where EPC ratings may be marginal and make timely recommendations as to how premises could be improved to meet the requirements of the new Act.

For more information, contact Mark Rabbett, Director at Watts Group PLC, on 020 7398 8432.

The Watts Bulletin is the technical companion to the Watts Pocket Handbook, the essential guide to property and construction, as used by professionals since 1983.

Watts Bulletin editor: Trevor Rushton.