The UK government has proposed new (EPC) energy performance certification regulations, which could impact all residential lettings of property in England and Wales.
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 energy costs and overheads for renters.
At present, a tenancy cannot be granted to a new or current tenant for a commercial property with an EPC rating of F or G unless the property is listed on the PRS Exemptions Registers.
However, from the 1st of April 2023, it will be an offence to continue to let or rent out a property if it does not have a rating of at least E. The penalty is based on the property's rateable value and will be between £10,000 – £150,000 per breach. Details of the breach may also be made publicly available.
At this stage, the key regulatory changes are as follows:
Key Takeaways to the suggested Energy Performance Certificate (EPC) requirements:
- From the 1st of April 2023, it will be illegal to continue to let or rent out a property if it does not have a rating of at least an E.
- Penalties are based on the property's rateable value and will be between £10,000 - £150,000 per breach.
- Landlords must provide an EPC before a property is advertised, and for a valid EPC to be in place at all times while a property is let.
- Since the 1st of April 2020, residential properties have been required to have a rating of an E or higher, which is looking to change to a C or higher in 2025.
- 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 this change will affect many people.
Landlords must 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 the 1st of April 2023 to new tenants, you must ensure that you comply with an E rating or better. You will not be able to advertise your property if you do not have a rating.