Energy conservation is becoming increasingly important, but do you know all you need to about the EPC regulations?
In these days when we are all becoming more aware of energy conservation and building efficiency, it pays to keep up with the latest guidelines and regulations – in fact, you can get into a lot of trouble if you don’t, particularly if you are a landlord, with potential fines of up to £30,000 for non-compliance.
An EPC, or Energy Performance Certificate, is a building energy survey which shows you how energy efficient the building is, and includes a list of recommendations on how to improve its energy efficiency. It’s now a legal requirement to have an EPC if you’re selling, leasing or renting a property, but even if you are not selling or renting, it’s worth having an EPC survey to find out how you could reduce your energy bills and carbon emissions.
An EPC will give your property an energy-efficiency grade between A and G, with A being the best – that is the most energy-efficient – and G being the worst. New-build homes tend to have high EPC ratings, while older homes often have lower ratings of around D or E. The average EPC rating for a home in the UK is D.
The Minimum Energy Performance of Buildings Bill had its second reading in parliament on April 24, 2023. Originally, the Bill proposed that rental properties in the UK with existing tenancies had a deadline of 2025 to achieve a minimum EPC rating of band C. Now it seems that landlords will have more time to get their properties up to standard. »
The new proposed deadline uses the date originally set specifically for new tenancies, 31st December 2028. Both existing and new tenancy properties will be have to meet this date – if the Bill becomes law, which is some way off.
RATINGS
Still, these EPC requirements could be a major issue for some landlords, particularly pension holders in the Self Invested Pension market, as they may face with the prospect of their pension asset being devalued if the property is unable to meet the minimum rating.
Landlords of residential properties will have a close eye on the proposed increase in the Minimum Energy Efficiency Standard (MEES) to C rating from its current E, as this is likely to be introduced for new lettings from 2025/26, and all lettings from 2027/28. This may also apply to commercial landlords.
Mortgage lenders may insist on a C rating as a condition of mortgage offers, and this may be linked to a preferential loan percentage rate. Landlords faced with footing the bill for improvements may even be considering exiting the market rather than paying the costs, but we’ll discuss later on what they could do.
An EPC will give your property an energy rating from A (very efficient) to G (inefficient) and is valid for 10 years, and importantly, you can check any home’s EPC rating through the government’s website. Using the register’s EPC retrieval page, www.epcregister.com, you can search for a property’s energy performance certificate by postcode. This is useful for looking up your own certificate, or for finding the certificate of a property you are considering moving into.
There are several good reasons for having an EPC certificate. The main one is that a survey will help you to lower your energy bills by recommending energy efficient measures to add to your home, reducing energy consumption.
A better EPC rating should also improve the value of your property should you wish to sell, and crucially, it may lower your mortgage through a ‘green’ mortgage scheme. Finally, of course, you will lower your carbon emissions, which will be good for the planet!
So how do you get an EPC? In many cases this can be arranged through your energy supplier, who can also put you in touch with recommended suppliers for measures such as loft insulation or solar energy panels. You can also find an EPC assessor through an estate agent, or through the EPC register’s assessor page. Some companies will offer an EPC survey for a fixed price regardless of the size of the property, and will be certified by the TrustMark, the government endorsed quality scheme, so you should be able to rely on their professionalism. An EPC should cost you around £120.
It’s worth getting a quote from your estate agent and a registered surveyor for the survey and energy report. The Scottish government website provides a list of EPC-approved organisations.
There are some variations to requirements for listed buildings, where energy saving measures may not be architecturally appropriate, stated in the Energy Performance of Buildings (England and Wales) Regulations 2012, which gives the foundations for the MEES standards.
The most effective ways to improve your EPC include:
- Loft insulation – relatively inexpensive and easy to install, loft insulation can prevent energy loss, a great deal of which is often through a building’s roof
- Wall insulation – possibly more expensive to install depending on whether the building has cavity or solid walls, but again it can do a great deal to reduce energy loss
- Double glazing – draughty windows and doors should be replaced with sealed double- or triple-glazed units, which reduce heat loss and have the side benefit of reducing noise
- Fitting solar panels – these can be an efficient source of power, though initial installation cost can be high
- Replacing inefficient boilers – if you have an old boiler as part of a central heating system, replacing it with a new more efficient device can save energy and money
- Secondary heating sources – lossy energy source such as open fireplaces should be replaced with more efficient alternatives such as modern wood-burning stoves
- Low-energy lighting – even a smaller change like this that involves no structural alteration can be a cheap, easy way to lower energy bills
LANDLORDS
If you are buying or renting, it’s the seller’s or landlord’s responsibility to arrange an EPC, but it’s important that you as the buyer or tenant see and understand the certificate. As a buyer you should make sure you receive an EPC from the seller. You can use its recommendations to inform any renovations you might want to carry out, or even to try and negotiate the property price.
The EPC should include the potential cost of undertaking improvements, and the typical saving over a three-year period; the estimated costs of heating, lighting and hot water after improvements are made; total potential savings, and the energy performance rating you might receive after making improvements.
As a seller, it’s a legal requirement to have an energy performance certificate for your home before you sell it. This can be arranged through your estate agent or directly with an EPC provider.
If selling in Scotland, you’ll need a Home Report, which includes an EPC (known as an Energy Report), a house survey and a property questionnaire. According to the Royal Institute of Chartered Surveyors (RICS), they should cost between £585 and £820, depending on the size of the home. Homes in Scotland have to display the EPC somewhere in their property, for example by the boiler.
FINANCE
If you’re a buy-to-let landlord, it is now a legal requirement that your property has an EPC rating of E or above before you can take on a new tenant or renew an existing contract. Since 2020, this rule applies to all properties with existing tenancies, too.
Under the proposed changes, by 2028 all rental properties will need to have a C rating. The expense of achieving this may lead to some landlords considering exiting the market – others may look to specialists who can support portfolio and professional landlords with advice in financing improvements to their existing properties.
This article was originally published in Property & Home with Martin Roberts, Summer 2023. See more here
