Advice on Energy Performance Certificates

Update December 2011

The Minister of State (Housing and Local Government) Communities and Local Government has stated:

"We have listened carefully to the concerns raised by hon. Members and the tourism industry and have concluded that an energy performance certificate should not be required for a holiday let where:

The property is rented out for less than four months in a year; or

It is let under a licence to occupy-regardless of the amount of time it is occupied.

A licence to occupy is an arrangement where the holidaymaker does not have exclusive use of the property; for example, where the property owner or their representative has the right to access the premises during the period of the booking.

My Department will be publishing detailed guidance on this issue shortly. We will also be making appropriate amendments to the Energy Performance of Buildings Regulations."

The Tourism Alliance has confirmed that 'you do not require an EPC as long as you do not enter into tenancy agreement with your customers. Under normal circumstances, customers will only have a 'license to occupy' the property - in the same way that a customer at a hotel has a license to occupy the hotel room for a set period. Operators that enter agreements with their customers will need to check the wording of their agreement to ensure that it allows the operator a right of access and does not grant the customer exclusive use of the property. This will help ensure that such an agreement cannot be considered to be a tenancy.'

Advice June 2011

As most of our self catering members are now aware; changes to the requirements for Energy Performance Certificates (EPCs) for holiday lets are due to come into place from 30th June 2011. 

The Department for Communities and Local Government (DCLG) has amended its guidance to state that an Energy Performance Certificate (EPC) must be obtained for properties that are rented out as holiday lets for 20 weeks or more in any 12 month period. 

However, we understand that the English Association of Self-Catering Operators have taken legal advice challenging the new guidance and are advising its members to hold off getting EPCs. The Tourism Alliance is also challenging this too.

The latest advice circulating on EPCs seems to suggest that an Energy Performance Certificate only applies to holiday lets where a tenancy is created - in our previous correspondence we have had with the Department of Communities they have referred to the Housing Act which specifically covers tenants.

A tenancy is where the tenant has an interest in land that involves 'exclusive possession' - that means the ability to control the way a premises is used and to exclude others from it. Therefore if there is no possession in this legal sense then there is no tenancy.

In the case of holiday lets whilst there will be a contract to let, the owner retains full control of the property, the rights associated to it and has full and unfettered access to it - indeed the whole principle of most holiday lets is to ensure that no tenancy is created either deliberately or accidentally.

(Indeed many of our holiday properties have specific Section 106 agreements with the local authority prohibiting residential use of these properties to tenants).

Whilst there is still some confusion - our advice remains as previously given, that 'normal' holiday lets are not covered by this legislation and therefore EPCs are not required. We do not dispute that a holiday property being let under a tenancy agreement or for a long term residential use will require an EPC.

Please see the link below to EASCO (English Association of self catering operators) who have taken QC's advice on the matter which confirms our position; that it does not apply in the case of a holiday let unless a tenancy is being entered into or the let is a normal residential.

http://www.facebook.com/eascouk

Shropshire Tourism also advises its members to hold off getting EPCs until closer to the 30th June deadline in case EASCO are able to overturn the new guidance. 

Advice as at 24/05/2011

The latest advice circulating on EPCs seems to suggest that:-

An Energy Performance Certificate only applies  to holiday lets where a tenancy is created - in Shropshire Tourism's previous correspondence with the Department of Communities they have referred to the Housing Act which specifically covers tenants.

A tenancy is where the tenant has an interest in land that involves 'exclusive possession'  - that means the ability to control the way a premises is used and to exclude others from it. Therefore if there is no possession in this legal sense then there is no tenancy.

In the case of holiday lets whilst there will be a contract to let, the owner retains full control of the property, the rights associated to it and has full and unfettered access to it - indeed the whole principle of most holiday lets is to ensure that no tenancy is created either deliberately or accidentally.

(Indeed many of our holiday properties have specific Section 106 agreements with the local authority prohibiting residential use of these properties to tenants).

Whilst there is still some confusion - our advice remains as previously given, that 'normal' holiday lets are not covered by this legislation and therefore EPC's are not required. We do not dispute that a holiday property being let under a tenancy agreement or for a long term residential use will require an EPC.

We will keep you further advised as we can.

Advice as at 15/03/2011: Many Shropshire Tourism members have been in touch asking for advice and guidance on Energy Performance Certificates, or EPC's for self catering holiday lets.

Many Shropshire Tourism members have been in touch asking for advice and guidance on Energy Performance Certificates, or EPC's for self catering holiday lets.

Currently anyone selling or renting a property to a tenant requires an Energy Performance Certificate (EPC), but properties used as holiday lets have traditionally been exempt.

New government guidelines due to come into force on the 30th June 2011 now require any property being rented out as a dwelling for a 4 months or more in any 12 to have an EPC this includes properties being tenanted out for holiday usage.

The attached link below is the official guidelines and the Definitions on Annex C seem to raise more questions than answers

http://www.communities.gov.uk/documents/planningandbuilding/pdf/866773.pdf

We have therefore asked for clarification on the following points:-

1. What is the situation regarding properties that are subject to Section 106 agreements with local authorities actually prohibiting residential (dwelling) use.

2. What is the situation regarding a 'letting' where there is no tenancy agreement – either verbal or written – as is the case with most short term holiday lets of a few days or even a couple of weeks.

3. Does the 4 month tenancy rule have to be a single tenant – what is the situation where there are multiple individuals using a property whom collectively make up the occupancy of the four month period in any 12.

4. To assist our interpretation, we have asked for the legal definition of a tenant, a dwelling and tenancy agreement in this instance.

We have asked Visit England to assist us in getting the matter clarified as soon as possible. You may wish to contact your MP for their assistance too.

Our advice is to wait until the above points have been clarified and not to proceed with an EPC at this stage until they have.

We will of course keep you advised as we get further news.