The government is set to issue an update on the methodology used to work out the energy efficiency of homes by 15th June. Will it affect your EPC rating?
Energy performance certificates (EPCs) were first introduced in 2007 for homes with four bedrooms or more being sold in England and Wales, before being extended to all properties – including rental homes – in 2008.
Essentially, an EPC provides a rating between A and G of a property’s energy efficiency, which can give potential buyers or tenants a good indication of how much a property might cost to run, and how eco-friendly the home is currently.
Since energy bills have soared over recent years, along with a rise in environmental accountability among the general public, higher EPC ratings have become increasingly sought after. Lower EPC ratings can harm the value of the property, while making buy-to-lets harder to rent out at the market rate.
What’s changing?
According to government papers, an updated methodology – called RdSAP 10 – is due to be introduced, with the initial date set for this on 15th June. The idea behind the change is to better reflect how homes are used and to improve the accuracy of EPC ratings.
Under the new guides, energy assessors will look in more detail at things like types of window glazing and condition, heating system efficiency based on model numbers and manufacturer data, and whether a home has smart heating controls.
If your homes has undergone improvements since its last EPC was issued, you must be able to provide evidence of this – if you can’t, your property risks receiving a lower EPC rating, whereas the previous methodology would have been based more on default assumptions.
EPC ratings for flats could improve
Under the RdSAP 10 update, assessors will use more refined methods for calculating floor area and insulation levels. This should provide a more precise understanding of how a home retains heat and uses energy.
At the same time, flats, maisonettes and mid-terrace properties could benefit from higher EPC ratings under the new methodology, which changes how heat loss is calculated in such properties. It presumes there is no heat loss through the floor if there is another flat below.
The main factors that will affect scoring under the changes will be fabric performance; heating systems; smart readiness; and energy cost – so property owners can use these as a focus when looking at potential energy efficiency improvements.
Why energy performance matters
With a greater focus than ever on reducing our carbon footprint and saving money on energy bills in the process, EPC ratings on homes have become hugely important.
Top-rated properties (A or B) are becoming the most sought after property type, as they will not only be cheaper to run but are unlikely to require vast sums of money being spent on them in the future to improve their energy efficiency.
In the private rented sector, there is evidence that investors are already leaning towards higher rated properties when adding to their portfolios; while tenants now mark energy efficiency as one of the top things they look for in a home.
Lenders are also becoming more stringent on EPC ratings, and many are also marketing ‘green mortgage’ products designed to incentivise people to either buy highly energy efficient properties, or to upgrade existing homes in order to avail of better interest rates.
Across the UK housing market, new-build homes are generally the most energy efficient option, with around 87% of new-builds achieving EPC ratings of A or B, while only around 5% of existing housing stock. This is making this segment of the market more sought after among homebuyers and property investors.
