As a landlord, it is crucial that you stay informed about the latest regulations and requirements as well as provide a safe and energy-efficient environment for your tenants. One area that has recently undergone changes in the United Kingdom is the Energy Performance Certificate (EPC) rules. In this blog, we’ll discuss the latest changes made to EPC regulations for both commercial and residential properties. We provide insights into their significance and how they may impact your responsibilities as a landlord.
What is an EPC?
An Energy Performance Certificate (EPC) is a document that assesses and rates the energy efficiency of a property. It gives you information on a property’s energy consumption, carbon emissions, and potential energy-saving measures. The rating ranges from A (most efficient) to G (least efficient). EPCs are required whenever a property is built, sold, or rented out.
EPC Changes for Residential Properties
Residential properties are now subject to revised EPC rules aimed at enhancing energy efficiency and reducing carbon footprints. This applies to standard buy-to-let properties as well Houses in Multiple Occupation (HMOs). Below are the key changes you’ll need to know if you’re a residential landlord:
- Requirement for EPC Band C by 2025. Starting from April 1, 2025, all new tenancies, including renewals and extensions, for domestic properties must have a minimum EPC rating of C. This requirement will apply to all private rented properties by April 1, 2028. To comply with the regulations, you’ll need to proactively improve their property’s energy efficiency and achieve the required rating before the deadlines.
- Cost Caps for Improvement Measures. Starting from April 1, 2023, a cost cap of £3,500 (inclusive of VAT) per property per measure will be introduced. This means that you’ll only be required to implement energy efficiency measures below this cost cap. However, if the recommended measures exceed the cost cap, you can register an exemption. Bear in mind that measures below the cost cap must still be implemented.
EPC Changes for Commercial Properties
Commercial properties are also subject to more stringent EPC regulations aimed at improving energy efficiency and reducing carbon emissions. The key changes affecting commercial landlords are as follows:
- Minimum Energy Efficiency Standards (MEES). Since April 1, 2018, commercial properties with an EPC rating below E have been unable to renew or sign new leases. As of April 1, 2023, this requirement has expanded to include all existing leases, making it illegal to continue renting out properties with an EPC rating below E. With this in mind you must take the necessary steps to improve energy efficiency and achieve a higher EPC rating in order to avoid falling foul of new regulations. Various exemptions apply.
- Cost Caps for Improvement Measures. Starting from April 1, 2023, a cost cap of £3,500 (inclusive of VAT) per property per measure will be introduced. This means you’ll only be required to implement energy efficiency measures below this cost cap. Keep in mind that if the recommended measures exceed the cost cap, landlords can register an exemption. However, it is important to note that measures below the cost cap must still be implemented.
How Can I Improve My EPC Rating?
Improving your property’s EPC rating not only ensures compliance but also brings several benefits. Here are some measures you can take to enhance your property’s energy efficiency:
- Insulation: Improve insulation in walls, roofs, and floors to minimize heat loss and reduce energy consumption.
- Heating Systems: Upgrade to more efficient heating systems, such as condensing boilers or heat pumps, which can significantly reduce energy usage.
- Lighting: Replace traditional incandescent bulbs with energy-saving LED lights to lower electricity consumption.
- Windows and Doors: Install double or triple glazing and ensure proper insulation around windows and doors to prevent drafts and heat loss.
- Renewable Energy Sources: You could consider installing solar panels or other renewable energy systems to generate clean and sustainable energy.
- Smart Technology: Implement smart thermostats, energy monitors, and motion sensors to optimize energy usage and reduce wastage.
- Building Maintenance: You should regularly maintain heating systems, insulation, and other components to ensure their optimal performance.
What Are the Benefits of Improving Energy Efficiency in My Property?
Improving energy efficiency in your property offers several advantages, including:
- Cost Savings: Enhanced energy efficiency leads to reduced utility bills, benefiting both you and your tenants.
- Increased Property Value: A higher EPC rating enhances the desirability and value of your property in the market.
- Environmental Impact: By lowering energy consumption, you contribute to reducing carbon emissions and promoting a more sustainable future.
- Compliance and Legal Requirements: Adhering to EPC regulations ensures compliance and helps avoid penalties or legal issues.
- Improved Tenant Satisfaction: Energy-efficient properties provide comfortable living conditions, leading to happier tenants and potentially longer tenancies.
What are Green Mortgages?
Green mortgages, also known as energy-efficient mortgages or sustainable mortgages, are buy-to-let mortgages that offer favorable terms and incentives for properties with high energy performance. These mortgages encourage landlords to invest in energy efficiency measures by providing discounted interest rates or additional borrowing capacity. In addition, some lenders offer cashback incentives to buy-to-let borrowers if they improve the property’s EPC rating during the term of the mortgage.
Staying informed about the recent changes to Energy Performance Certificate (EPC) rules is crucial for landlords in the UK. Whether you own commercial or residential properties, understanding these regulations will help you meet your obligations, avoid penalties, and provide energy-efficient and comfortable spaces for your tenants. By implementing energy-saving measures you’ll not only comply with regulations but also enjoy the benefits of reduced costs, increased property value, and a positive impact on the environment.