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Open letter to Grant Shapps MP (Written on behalf of DCHI 20th November 2011)
Changes to the rules -
Dear Mr Shapps MP,
I write to express our concern over a potential change to the requirement for EPCs for holiday properties as they have been portrayed in the media. Of course the intention may differ from the way your statement has been portrayed and I apologise if we have misinterpreted your intentions.
Our understanding is that government is to issue guidance that “Holiday properties that are rented out for less than four months in a year will be exempt, as will holiday lets that are let under a licence to occupy – regardless of the length of time of occupation.”
We are well aware of the first exemption as it was made clear in the DCLG guidance “Energy Performance Certificates (EPCs) for holiday lets in England and Wales: Frequently Asked Questions” issued on 13th April 2011. That guidance does however state that “An EPC is required for a property rented out as a holiday let” and that the regulatory regime “does not exclude short term holiday lets”.
Currently we cannot see how DCLG can issue guidance that reverses that issued in April with the legislation unchanged, without incurring a liability to reimburse the thousands of holiday home owners who have paid for EPCs that would then be determined to have not been required.
We would not dispute that in one sense “the requirement for an EPC in holiday lets was unnecessary red tape”. It has always been our position that requiring marketing of a holiday let to be accompanied by the EPC is unnecessary as it will have little relevance to a holidaymaker. Simply showing the rating on a brochure in the same way as the number of beds or whether it takes pets would be sufficient to satisfy those wishing to make an environmentally responsible choice.
On the other hand it is quite clear that a building occupied for at least 4 months of the year (and potentially the whole year) will have sufficient energy use for identifying the efficiency and reducing consumption to be a very worthwhile exercise. It is also important to note that in most other rental situations it is generally the occupier who pays the energy bills and who therefore benefits from the EPC recommendations being carried out. With holiday lets we have a unique situation where it is the owner, not the occupier (holidaymaker) who will benefit from recommended measures, and the savings from reduced consumption will go straight on to the bottom line of the owner’s business.
For the above reason it is apparent that producing an EPC for a holiday rental landlord is potentially the most valuable scenario of all. The EPC is produced for someone who owns the building, will continue to own the building, has the ability to upgrade the building and will directly benefit from a reduction in energy cost. There are virtually no other types of property transaction where all four of these apply. Generally the purchaser of an EPC is doing so for the benefit of someone else so it would not appear wise to eliminate the opportunity to produce the EPC for a building owner with a vested interest in the benefits it can bring.
The link to a licence-
If the government is serious about its Green commitments it would be extremely counterproductive to remove the requirement for EPCs from holiday properties let out for more than 4 months. We fully support however reducing red tape by eliminating the burden on owners of holiday properties having to provide a copy of the EPC to potential short term holidaymakers.
Changing the legislation to improve the regime applicable to holiday lets does make sense and we are surprised it was not included in the amendments of 10th October. We would however strongly recommend not to remove the requirement to address properties occupied by people who have no financial incentive to minimise their energy use (because someone else is paying the bill). Reducing the amount this sector can waste is a crucial part of meeting the carbon reduction commitments. Our recommended approach would be something along the lines of the following:
a) An EPC is required to be obtained for any self-
b) For the purposes of these regulations if the rental agreement itself is for 4 months or more this is considered to be a typical rental and the normal rules apply. If it is for less than 4 months it is considered to be a short term arrangement. For short term arrangements the following alternative rules apply:
a. The EPC must be provided along with property details to any prospective occupier when marketing any rental that is expected to last more than 2 weeks (long term holiday lets).
b. For any marketing of rentals expected to last no more than 2 weeks (typical holiday lets) the EPC rating must be displayed on any marketing materials but it is not necessary to supply a prospective occupier with the EPC unless they request it.
c. In all cases where a property is subject to the rules for short term arrangements the front page of the EPC must be displayed on the wall of the property, preferably in the vicinity of the entrance but in any event where it can be seen by all visitors, and the full EPC must be included in the documents provided in the property by the owner for the occupier.
The above maintains the situation where properties that contribute significantly to the CO2 emissions of UK buildings are assessed and recommendations for improvements are made. It eliminates the red tape of complicating the marketing of those properties to holidaymakers. It is this impracticality and not the cost of producing the EPC that has been the objection raised by most of the holiday lettings organisations we have seen. Removing the EPC requirement rather than simply addressing the marketing requirement could be seen as a case of throwing the baby out with the bathwater.
I should also draw your attention to the fact that taking these properties out of the EPC regime will eliminate the possibility of subsequently requiring a minimum EPC rating for them to be let. Something the government has indicated a strong desire to do. That would exclude a large part of the housing stock contributing to energy consumption and CO2 emissions from the policies intended to address those very issues. It also reduces the likelihood of these properties being considered for the Green Deal. Both these factors would make it a significant policy own goal if it happens as well as seeming to undermine the efforts of your colleagues at DECC.
If you do intend to ignore the concerns above and proceed as the press are indicating, please would you provide us with the contact details for the person to whom we should direct all claims received by our members for reimbursement of the cost of the EPCs purchased on the basis of the guidance issued on 13th April 2011?
Thank you for your kind attention.
Andrew Stunnell MP
Lord Marland of Odstock
Chris Huhne MP
Eric Pickles MP
Charles Hendry MP
Gregory Barker MP
Please note. This correspondence is not intended to be confidential and will be shared with other stakeholders.
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