With so much news surrounding EPC regulations over the last 12 months, it can be difficult to understand your position and when to act. By taking a closer look at EPCs in more detail, you can discover how the government’s current take is impacting landlords.
Guest post written by Emily Hill, PR & Content Specialist, Mortgage Advice Bureau.
Staying abreast of regulations is essential for ensuring the health and safety of your tenants, and that your rental properties are running as effectively and cheaply as possible.
Among the regulations that landlords need to have at the top of their radar are those regarding energy performance certificates (EPCs). EPC regulations have been making headlines over the last couple of years, and with so much noise out there, it’s important for you to know all the facts.
What is an EPC?
An energy performance certificate (EPC) is a rating that outlines the energy efficiency of a property, rated on a scale from A to G. A-rated properties are the most energy-efficient, while G-rated properties are the least. The certificate also provides recommendations for improving energy efficiency and reducing carbon emissions.
EPCs were introduced by the government in 2007 to raise awareness of a property’s energy consumption.1 This gives potential tenants (and buyers) an idea of how energy efficient the property is, and how much their energy bills may cost. They also provide recommendations of improvement in terms of how you can enhance the property’s overall energy efficiency.
EPC regulations in the UK mean it’s a legal requirement for landlords to obtain an EPC before renting out a property. An EPC is valid for 10 years, and must be provided free of charge to prospective tenants. Failure to comply with this requirement can result in financial penalties and legal consequences, so it’s crucial to ensure that your property has a valid EPC before advertising it for rent.
EPC U-turn – what’s the latest on EPC regulations?
In 2021, a new minimum rating for residential rental properties in England and Wales was enacted – changing minimum ratings from E to C (or better) by 2025, with existing tenancies to comply by 2028.2 However, the proposed legislation hadn’t yet made its way through parliament before being scrapped.
In September 2023, Prime Minister, Rishi Sunak announced plans to scrap the enforcement of minimum EPC ratings in England and Wales.3 This decision was a result of ongoing concerns surrounding the costliness of energy efficient upgrades, particularly in light of the ongoing cost-of-living crisis.
Instead, the government is encouraging households “to do so where they can” in terms of making energy efficient improvements, with the U-turn reducing the financial impact of changes to EPC regulations that “would have cost families upwards of five, ten, fifteen thousand pounds”.4
What does this mean for landlords?
For landlords who haven’t yet made changes to their properties, this latest government U-turn on EPC regulations would have brought with it a sense of relief – not only in terms of associated costs, but also the short turnaround required to make these changes. However, for those landlords who had already anticipated the forthcoming EPC regulations and invested in expensive upgrades, many will have been left feeling a sense of frustration.
Above all, the uncertainty around EPC regulations means that landlords are unable to make investment decisions without a clear idea of whether to invest in energy efficient improvements now, or play the waiting game. This comes with its own set of issues, as it means that tenants could be renting properties with poor energy efficiency for longer, leaving them with more expensive utility bills.
The benefits of an energy-efficient rental property
As EPC ratings climb up tenants’ wishlists, and if the housing market is to meet net zero targets, the message to landlords remains: rental properties need to be retrofitted. However, it doesn’t have to cost the earth. Even simpler upgrades, such as installing energy-efficient lighting, or improving insulation, can significantly enhance your property’s energy performance, saving you and your tenants money on energy bills in the long-term.
For more costly renovations, it’s worth noting that many energy-saving improvements may also be eligible for government incentives and grants, making them more financially viable. There are also a range of green mortgage products available, which encourage energy-efficient property upgrades by offering discounted interest rates or other financial incentives.5
By staying informed about EPC regulations and enhancing the energy efficiency of your properties, you can enhance the desirability, value, and sustainability of your rental portfolio – all while remaining compliant and contributing to a greener future.