Why landlords need to improve the energy performance of their properties
Changes to the energy performance laws for rental properties look set to hit landlords 2025. We explain how you can prepare.
If you’re a landlord, you probably already know about the energy efficiency rules that were introduced in for rental properties 2018. They stated that for any new tenancies, a property must have an Energy Performance Certificate (EPC) of band E or above. In April 2020, that rule was extended to cover all tenancies – and that’s not the end of the story. The Minimum Energy Performance of Buildings Bill, which is currently making its way through parliament, states that from December 31 2025, rental properties will need an EPC rating of C or above for all new tenancies – and from December 31 2028 this rule will apply to existing tenancies too. The fine for landlords who fail to obtain the correct rating will soar from £5,000 to £30,000.
If you’re a non-domestic landlord, another key date is April 2023, when new rules will require commercial buildings to have an EPC rating of E or above. Landlords will face fines of up to £150,000 if they fail to comply.
What is an EPC?
Think of the energy rating labels you see on household appliances – an EPC is essentially the same thing, but for a property. The assessment of the building’s energy performance is carried out by an accredited domestic energy assessor, who will decide on its energy rating based on the following factors:
- the type of building (i.e. flat, house or bungalow) and whether it is detached or not
- the age of the building
- the number of habitable rooms (excluding kitchens, bathroom hallways, stairs and landings)
- extensions and their construction and rooms in the roof
- the dimensions of the building and the number of floors
- the amount and type of glazing (i.e. single or double glazing)
- the material used to build the property (e.g. brick, stone, timber frame, etc.)
- wall insulation
- roof construction (e.g. flat, pitched) and insulation
- the number of chimneys and open flues
- the heating systems and the type of fuel used.
They will then issue an EPC with a grade from A to G, with G being the least efficient. If necessary, the assessor will also make suggestions to help you raise the energy performance of the property. These may include insulating cavity walls and loft spaces, installing a condenser boiler, improving your double glazing and installing low energy light bulbs.
How long does an EPC last?
An EPC lasts for 10 years, after which time you won’t have to renew it until you create a new tenancy agreement or sell the property.
What will be the costs of achieving an C rating?
At present the government’s cost cap for landlords investing in raising the energy efficiency of a property is £3,500 – in other words, if you’ve spent that amount and have not achieved the target rating, you may qualify for an exemption (see below). The spending cap is set to rise to £10,000 in 2025. There is no cap for money that has been obtained from third parties. Third party sources of funding listed by the government in its guidelines for landlords include Green Deal finance, local authority grants and Energy Company Obligation (ECO), a government energy efficiency scheme that requires energy companies to install energy-saving measures in homes.
The government estimates that improving a property so that it achieves band C will on average cost landlords £4,700 – but inevitably this will vary from property to property. There are hopes that a successor will be announced to the Green Homes Grant, which covered a range of improvements, from primary measures (insulation and low carbon heating solutions) to secondary measures such as improvements to windows, doors, heating control and insulation. It’s also hoped that the government will incentivise mortgage companies and other lenders to offer preferential rates on loans to improve energy performance.
The rules requiring rental properties to have an EPC rating of E or above are called the Domestic Minimum Energy Efficiency Standard (MEES) Regulations. They apply to the vast majority of properties, but a few types of property are exempt from needing an EPC. They include:
- Temporary buildings with a planned use period of two years or less.
- Residential buildings that are intended to be used less than four months of the year or where the owner or landlord could reasonably expect the energy consumption of the building to be less than 25% of all year-round use.
- Buildings protected as part of a designated environment or because of their special architectural or historical merit, whose character would be altered by energy improvement work.
- Stand-alone buildings with a total useful floor area of less than 50m2 (i.e. buildings entirely detached from any other building).
A building is also exempt if you can demonstrate that:
- the building is suitable for demolition.
- the resulting site is suitable for redevelopment.
- all the relevant planning permissions, listed building consents and conservation area consents exist in relation to the demolition, and
- in relation to the redevelopment, either outline planning or planning permission exists and where relevant listed building consents exist.
There are several other ways a property can be exempt from the minimum energy efficiency standard requirements – including if a tenant refuses access, and if you have already spent up to the landlord cost cap but have failed to achieve the target band. The government’s guidelines on exemptions are here for domestic landlords and here for non-domestic landlords.
How do I get an EPC?
You’ll need to book an accredited assessor to visit the property – head here to get started. Remember that unless there’s an emergency, you can’t enter your rental property unannounced when a tenant is living there – so you’ll also have to make sure you’ve given your tenant at least 24 hours’ written notice about the assessor’s visit.
We can help
Need help raising the EPC rating of your rental property? From insulation to heating, our friendly experts have the solution. Get in touch today to find out more about our services and finance options.
This article contains public sector information licensed under the Open Government Licence v3.0.