The UK government has proposed new (EPC) energy performance certification regulations that would change the minimum energy efficiency standards for rentals, from an E to C. These changes could take effect as early as 2025 and will impact all residential lettings of property in England and Wales.
Currently, the minimum energy efficiency standard for a rental is an E rating for your EPC. The proposal is to improve energy efficiency for all homes around the country, reduce carbon waste and progress the government’s net-zero targets, and reduce the energy costs and overheads for renters.
These suggested changes will likely be phased in, starting with new tenancies from 2025, and will need to have a C grade by 2028. Penalties for non-compliance include fines of up to £30,000.
At this stage, the key regulatory changes are as follows:
Key Takeaways to the suggested Energy Performance Certificate (EPC) requirements:
- All new tenancies from 1 April 2025 and existing ones by 1 April 2028 must meet band C or higher on an EPC.
- Increase the maximum fine level to £30,000 per property for each breach of the regulations.
- Landlords are required to provide an EPC prior to a property being advertised and for a valid EPC to be in place at all times while a property is let.
- Increases in the cost cap to £10,000 inclusive of VAT per property.
- Updated affordability exemption regime to come into force on 1 April 2025
- The requirement for landlords to install ‘fabric first’ measures, e.g. insulation.
- The private rented sector supports the uptake of smart meters.
- How Will These New EPC Regulations Impact Landlords?
With approximately 57% of existing properties at the beginning of 2021 given a D rating or worse, it is evident that many people will be affected by this change.
Landlords need to formulate a plan to increase their rating and spread out the cost of the necessary upgrades over the next few years to avoid a single large expense.
To improve an EPC rating, a landlord can expect to spend money on various things, including insulation for the property, heating, lighting, and windows. Another essential thing to note is that the government is phasing out old school boilers, favouring more energy-efficient options. At some point, there will be a need to upgrade to these new solutions, not only because they will increase your EPC rating and lower the household's energy bills, but also because as these older boilers are phased out, parts and repairs are needed going to become increasingly expensive.
Under the new suggested EPC regulations, if you want to advertise a rental from 2025 onwards to new tenants, you will need to ensure that you are compliant with a C rating or better. You will not be able to advertise your property if you do not have a rating.