Landlords should beware of the proposed EPC regulations from 2025
What is an EPC rating?
An Energy Performance Certificate (EPC) is a certificate which demonstrates how energy-efficient a property is, based on a traffic light rating system, between A-G, with A being the most energy-efficient and G being the least efficient. The EPC provides an indication of estimated energy costs for the property and includes recommendations for improvements.
What are the current EPC regulations?
An EPC is required when a property is built, sold or rented. It is the responsibility of the Landlord to provide an EPC to the tenants. At the current time, an EPC is valid for 10 years. At present, the Minimum Energy Efficiency Standards (MEES) provide rental properties in England and Wales must have an EPC rating of ‘E’ or above, this has been the case since 1st October 2008.
What are the proposed new EPC regulations?
The Government have recently proposed new EPC regulations which will change the MESS, which are planned to take effect in 2025. The new EPC regulations will provide rental properties in England and Wales must have an EPC rating of ‘C’ or above.
These proposed changes will be phased in, the new regulations will be introduced for new tenancies first from 31 December 2025 and will subsequently apply to all tenancies from 31 December 2028.
It is also proposed that the penalty for not having a valid EPC will be raised from £5,000 to £30,000 from 2025.
The aim of the regulation is to make homes more energy-efficient and reduce carbon emissions as part of the Government’s target to net-zero by 2050.
It is envisaged that improving the EPC rating of a property will contribute to the lowering of energy bills, improve the standard of living across the UK, reduce carbon footprints and help fight fuel poverty.
How will the new EPC regulations impact Landlords?
Landlords will be required to improve an EPC rating or will risk facing a fine of up to £30,000 for non-compliance and not being able to rent their property.
Having to improve the EPC rating from the current minimum being an ‘E’ rating to the proposed new minimum of a ‘C rating will be difficult and has the potential to cost landlords thousand of pounds. The Government has recommended a “fabric first” approach and has suggested insulating walls, lofts and floors as well as installing a smart meter, upgrading to an energy-efficient boiler, improving windows with double or triple glazing and upgrading to LED light bulbs.
Energy performance investment is currently capped at £3,500 for landlords. However, if the minimum EPC rating is raised to a ‘C’, this will require greater investment and therefore, the Government have proposed to raise the cap to £10,000. The Government estimate that on average to improve the EPC rating to a ‘C’ this will cost landlords approximately £4,700. Some financial assistance may be available via Green Home Grants.
Although, the proposals are not set in stone, landlords are advised to bite the bullet and begin preparing for the proposal to come into place.
If an EPC is not held, an Energy Assessment will need to be carried out by an accredited domestic energy assessor in the first instance to ascertain the current rating. Landlords should then review the recommendations contained within the report to improve the energy-efficiency of the property.
Should you have any further queries in relation to the regulations, please contact Natasha Kelt, Juwayriyah Badrudin or Jennifer Whitwam in our Dispute Resolution Department.
Author: Courtney Parry-Lansdowne