Just 4% of landlords and tenants had in April this year heard of Minimum Energy Efficiency Standards (MEES), claims research by Just Landlords – when the standards made it illegal to take on new tenants in a property with an Energy Performance Certificate rating below E.
The worry is that a fair number of landlords could soon be in for a nasty shock.
According to government figures, around 300,000 properties are still rated F or G nationwide. But from April 2020, existing tenancies in properties rated below E will become illegal too.
A fair number of buy-to-let landlords who rely on their property as their pension face the prospect of a significant fine and their main source of income being out of action, until they get their polluting properties into shape.
Some renovations needed for MEES can be covered on a no-cost basis. But landlords that sit on poor-performing properties may be left needing to make major upgrades – and having to pay for them out of their own pocket.
While tax changes and market uncertainty have taken a little lustre off the appeal of buy-to-let as a retirement solution in recent years, there is little doubt that for many it is still a great option.
There are plenty of cases of retirees who rely on their rental property not just for their day-to-day income, but also to cover ongoing care costs. For them, the prospect of losing their rental income is a complete non-starter. But equally, not all of them have the capital on hand that would be needed for extensive property improvements.
Luckily, there are options available that can help landlords to preserve this income. Buy-to-let products have recently come onto the market, allowing older landlords to unlock some of the equity in their properties tax-free, while keeping their portfolio intact.
In the year since these products came to market, we’ve seen them used for a range of purposes, from supplementing income, to covering upfront care costs, to even being used to help younger relatives onto the housing ladder.
But for over 50s relying on properties that are failing the energy test to fund their retirement, getting them into shape to ensure they don’t lose that income stream could be one promising use for them that could help secure peace of mind.
Alice Watson is head of marketing and communications at Canada Life Home Finance.