Proposals to bring in tighter EPC rules for rental properties have been in consultation since 2020, and it seems the legislation could be delayed.
There has been a plan rumbling in the background for a while now that rental homes will need to achieve energy performance certificate (EPC) ratings of a minimum of C for new tenancies from 2025, and on existing tenancies from 2028. This is set to drastically improve energy efficiency standards in the sector.
However, while the proposals for the new EPC rules have been making their way through parliament, it now seems possible that the Department for Energy Security and Net Zero could be set to scrap this deadline, and instead push it back to 2028 for all tenancies.
This would grant leeway for the many landlords who own rental properties that currently fall below the proposed minimum standard, giving them more time to prepare. It is thought that more than 2.4 million rental properties in England would fail to achieve the new minimum energy efficiency standards.
What are the EPC rules now?
At the moment, all rental properties must have an up-to-date EPC certificate rated at a minimum of E or higher. If a property falls below this level (F or G), the landlord must be able to prove that they have spent up to £3,500 (including VAT) on energy efficiency improvements to try and achieve the minimum.
Once you have spent up to this amount on improvements, you must then register an ‘all improvements made’ exemption. However, the down-side for landlords is that, as standards in the rental sector improve, properties with low EPC ratings may become significantly less desirable.
Ministers have been consulting on boosting the EPC rules in the rental sector since 2020, in a bid to drastically improve the sector for millions of tenants. Not only do energy inefficient homes cost a lot more to heat, but they can also be cold and damp for tenants.
However, many in the industry are criticising the government for not having announced a clear timetable on changes to EPC rules for landlords, and “dragging its feet” when it comes to bringing out the new legislation. The NRLA has called on the government to improve clarity around EPC rules.
Landlords across the country, though, are becoming increasingly aware that if they own a property that falls below the standard, they must begin to consider whether to either sell or improve the property in order to be able to continue to let it out when the legislation finally comes into play.
Energy efficiency focus
While the new EPC rules, when they do take effect, are expected to contribute towards improving standards in the private rented sector, property investors, landlords and even tenants are already more aware than ever of the importance of energy efficiency in homes.
As everyone knows, energy bills have been skyrocketing since last year. The higher a property’s EPC rating (which is scored between A and G), the more energy efficient it is overall, which can drastically reduce energy output and costs. This is why the new EPC rules are important to the sector.
Property investors and landlords are already beginning to favour more energy efficient properties, including new-builds, as they are now seen as a more future-proof option. Flats, too, have fallen into favour among tenants as they are cheaper to run.
Awareness of EPC rules and ratings among tenants has also grown, with more prospective renters considering the energy efficiency of a property before agreeing to rent it. This ultimately could see rental prices pushed lower for the least energy efficient homes, while tenants will be willing to pay more for a higher quality property.
At BuyAssociation, we specialise in helping investors find the best property investment option for them, and our main focus is on off-plan new-builds in key locations across the UK. Get in touch for more information.
