Savills estimates that as much as 5-10% of UK properties might be unlettable

Tony Defries, director of building consultancy, comments: “Under the new Act all UK properties in the private rented sector must pass tests conducted by experts to prove they meet a Grade E EPC energy efficiency rating. A failure to do so will prohibit lettings. We believe that landlords and tenants who may wish to assign leases should be advised to assess the potential adverse effect posed by the new legislation to their portfolios to establish if their properties are exposed.”

The act, which seeks to help the UK meet its Carbon Reduction commitments, also introduced the Green Deal, a new financing mechanism allowing private UK firms to lend funds to business and consumers for energy efficiency improvements. This flagship lending scheme will ensure that residential and commercial property owners do not have to bear any upfront costs for installing green upgrades.

Under the new scheme lenders will recoup payments through a charge on the energy bill of the property because the program will be based on only lending where the expected financial savings are equal to or greater than the cost attached to the energy bill.

The Department for Energy and Climate Change (DECC) has stated that it expect a range of UK institutions to be involved in offering Green Deal finance. The Act, therefore, presents a number of opportunities for business, not just to obtain finance for energy efficiency improvements but for finance providers as well as professional service firms.”

Tony continues: “The UK market has seen a high proportion of international investors over recent years and its imperative these landlords seek advice in order to ensure their properties can be let and continue to provide a return on investment.”

Although the Act became law on 18 October 2011, the key provisions discussed above will need to be brought into force by DECC or by secondary legislation. DECC will organise the introduction of the Green Deal which is expected for October 2012, with consumers being able to borrow finance from next autumn onwards.