Well, don’t we have a bobby dazzler of a post for you here?! At least, we do if you consider changes to the EPC rules a scintillating topic. To be honest… we’re probably overselling this one. If you’re expecting razzmatazz or something of that sort, you’re going to be bitterly disappointed. However, if you’re a landlord, there’s some useful information here that you really should make sure you know about.
First things first, if you’re not familiar with the term EPC, it stands for Energy Performance Certificates. If you’re selling or buying a home, an EPC is provided as an informational guide of what to expect from an energy efficiency perspective. In addition to ‘grading’ the property, EPCs usually include some recommendations about how the performance level could be improved. These suggestions might be things such as adding in more insulation, upgrading to more efficient double glazing or banishing teenagers and their cornucopia of electronics (alright, alright, we made that last one up, but we bet it’d bring your bills down all the same).
EPCs play a bit more of an important role in the rental market, as landlords need to ensure their properties hit certain EPC targets in order to legally be able to rent them out.
EPCs have undergone quite a number of changes in the past few years. There was a fairly big overhaul of the process in 2020, which we’ve written about before. You can hop on back to read about the 2020 changes in more detail here, or you can refresh your memory with our quick refresher below:
The changes that came into effect in April 2020 were all to do with MEES. And no, we’re not talking about ourselves here. MEES is another fun acronym for minimum energy efficiency standards. In 2020 it was announced that all residential properties would have to have a rating of E or above. This meant that landlords who had F or G rated properties on their hands had to either make some serious efficiency changes or would no longer be able to rent them out.
There were, of course, a confusingly long list of exemptions to this. Why? Well, because that’s just how the law works. (We can say that, we’re professionals).
What’s changed now?
On top of these fairly recent changes (don’t tell us that 2020 was actually two years ago, we haven’t quite got our heads round that yet), landlords now have some more EPC changes to consider. In the interests of getting closer to net zero, the government have announced that all rental properties will soon need to be rated C or above.
Just like the last time round, things will be staggered. Landlords will need to meet this target for new builds and new tenancies by 2025. This will then be followed by all existing tenancies, which will need to hit the all-important C rating by 2028.
Along with these rating changes, the government are also updating the penalties for not having an EPC in place at all. The current penalty is £5,000, which will rise to £30,000 in 2025. In other words, you really don’t want to be caught without one.
What’s all this going to mean in practice?
It doesn’t take a property professional to realise that it’s going to be harder to achieve a ‘C’ energy grade than an ‘E’ energy grade. This is likely to be especially tricky for older properties that were not built with energy-efficiency in mind.
And if it’s going to be harder to achieve… well then, it’s also going to be more expensive. Currently, there is a £3,500 cap on what landlords are expected to spend on efficiency improvements per property. When the minimum acceptable rating rises to C in 2025, this cap will also rise. Landlords will need to expect to pay up to £10,000 to improve each property’s grade. Hopefully most reno bills will come in well under this: the government have estimated an average cost of £4,700 per property. It’s expected that there will be some financial assistance available to help with this, though as for what form this will take and how well it will work in practice, your guess is probably as good as ours.
Does this apply to everyone?
As always, the rules don’t quite apply in all situations. If your property falls into certain categories, you may well be exempt from having to meet the new MEES.
- Listed properties
- Places of worship
- Temporary buildings
- Industrial or agricultural buildings that don’t use much energy
- Detached buildings with a floorspace of less than 50 square metres
- Buildings that are due to be demolished
- Buildings where it would cost more than £10,000 to meet the MEES
Got more questions? Want to discuss what this means for you? Have a good argument about why EPC changes actually are a scintillating topic? You know we’re always keen to hear from you; feel free to drop us a line or give us a bell.