An Energy Performance Certificate (EPC) shows how energy efficient a property is by using a traffic light rating. The rating is based on a scale from A-G (A being most energy efficient). The certificate will then provide an estimate on energy costs and recommendations for improvements and savings to the property.
As it stands currently, an EPC is required as a responsibility of the Landlord. The EPC must have a minimum rating of E when a property is built, sold or rented and that certificate will be valid for 10 years.
However, the current requirements are looking likely to change as the Government starts to roll out their plan to be net-zero in carbon emissions by 2050.
There is a proposal in place to state that from 2025 new EPC regulations will be phased in starting with new tenancies from 31 December 2025.
This new proposal will require that rental properties in England and Wales will need a minimum of C rating or above in order to make homes more energy efficient.
The phase in will be complete by 31st of December 2028 by which time all tenancies will be required to have an EPC rating of C or above (with some exceptions).
The good news is that it is estimated that by putting these new requirements in place it will lower energy bills and improve the national standard of living, reducing fuel poverty and our carbon footprint.
Making the change a huge benefit for both the population and the environment.
However, as with most things in life, changes like this do not come without their catches.
The current penalty for landlords that do not abide by the EPC legislations can be up to £5,000. With the new phased in approach proposed, this penalty may rise to £30,000 along with not being able to rent a property from 2025 onwards.
This change will not come cheap, as it could potentially require landlords having to spend hundreds if not thousands of pounds on their properties in order to be able to abide by the new EPC requirements.
A way in which the Government has recommended to be an easier blow for Landlords across the UK is by starting with a “fabric” approach. This will involve paying attention to wall insulation, floors and roofing. They also suggest investing in an energy efficient boiler, double glazing and even a smart meter in order to keep on track.
The ‘Energy Performance Cap’ is an amount set by the government (currently £3,500) which is the maximum amount they require you to spend on the property to bring it up to the required EPC rating – once reached it gives you permission to let the property (a form of exemption).
The Government is also aware that with the EPC being raised, the cost to ensure a property is eligible will also evidently raise.
Therefore, they are also proposing to raise the Energy Performance Cap from £3,500 to £10,000, in order to keep align with the rise in estimated improvements costs.
Due to vast house price differences across the country the NRLA have been working to try and get this amount set dependent on locality or value.
A Further Important Key Change…
In addition we have also learned that the metrics used to calculate EPC ratings are being changed – this change has already been made for Commercial EPC’s which came into effect in June 2022 but we await confirmation of a launch date for Residential dwellings.
The good news is that the new metrics will mean that properties heated by electric will score higher – this is due to newer electric heating systems being far more efficient than their predecessors. However (the big ‘BUT’) there are concerns that gas heating will score lower.
We await further information, we will pass any updates on to you! Make sure you are following our social accounts as we generally announce breaking news there first.