THE NON-DOMESTIC PRIVATE RENTED PROPERTY MINIMUM STANDARD

Chapter 2: Minimum Standards Improvements and Funding
payment factor as follows:
where i is the Bank of England base rate in force at the time of the
calculation 25 . Annuity payment factor calculators can be found online to carry
out the equation calculation if required.
Calculating the ‘interest rate factor’ examples
Interest rate factor at 0.25% base rate = 0.14429
Interest rate factor at 0.5% base rate = 0.145729
Interest rate factor at 2% base rate = 0.15451
Interest rate factor at 5% base rate = 0.17282
54. Once the landlord has calculated the capital cost of installation (C), and the
interest factor (F), they should multiply the cost of installation by the interest
rate factor. They should then multiply this figure by seven to determine the
‘cost of repayment’(R) over a seven year period.
Completing the Payback Test
55. If, after having undertaken the above calculations, the value of savings on
energy bills (S) is shown to be less than the calculated cost of repayment (R),
the measure (or measures) will not meet the payback test and will not be a
relevant improvement for the purposes of the regulations and will not need to
be installed.
56. However, where the value of savings on energy bills is the same as or greater
than the calculated cost of repayment, the measure (or measures) will have
met the seven year payback test. They will therefore be relevant
improvements for the purposes of the Regulations and must be installed
before the landlord can let the property, unless an exemption applies. Table
one below shows several worked examples of this test.
25 Bank of England base rate is defined in regulation 28(8) of the Regulations.
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