Energy Performance Certificates [EPC] - What Landlords Need to Know

As a landlord in the UK, staying compliant with Energy Performance Certificate (EPC) regulations is essential for legal reasons and contributing to energy efficiency and sustainability goals. This guide will explore EPCs, the minimum energy efficiency standards required for landlords, the process of obtaining an EPC, best practices for maintaining compliance, and the consequences of non-compliance. By ensuring properties meet these standards, landlords can reduce energy costs for tenants, enhance property value, and avoid significant penalties and loss of rental income. Regular assessments and implementing recommended improvements are vital for staying compliant and benefiting from the evolving regulatory landscape.

What is an EPC?

An Energy Performance Certificate (EPC) provides an energy efficiency rating for a building. It ranks properties from A (most efficient) to G (least efficient) based on the energy performance and environmental impact of the property. The assessment includes details on energy use, typical energy costs, and recommendations on how to reduce energy use and improve efficiency.

Minimum Energy Efficiency Standard for Landlords

The Minimum Energy Efficiency Standards (MEES) aim to improve the energy performance of rental properties in the UK. Introduced to cut carbon emissions and energy consumption, MEES mandate that all rental properties have an EPC rating of E or higher. This rule has been in effect for new tenancies since April 2018 and all tenancies since April 2020.

Meeting this standard ensures properties are energy-efficient, helping to reduce carbon footprints and lower energy costs for tenants. Properties with an EPC rating of F or G must be upgraded to meet this standard, commonly through measures like loft and cavity wall insulation, energy-efficient boilers, and double glazing.

Overall, MEES supports the UK's goals for sustainability, tenant affordability, and reduced carbon emissions, making it essential for landlords to stay compliant and proactive in managing their properties' energy efficiency.

How to Obtain an EPC

1. Accredited Assessor: Landlords must hire an accredited domestic energy assessor to obtain an EPC. The assessor will evaluate the property's energy efficiency, considering factors such as insulation, heating systems, and glazing.
2. Assessment: The assessment typically takes 30-40 minutes, depending on the size and complexity of the property.
3. Report: After the assessment, the assessor provides a report with the property's EPC rating and recommendations for improvements.
4. Registration: The EPC is registered on the national EPC register and is valid for ten years.3

Risks of Non-Compliance

Non-compliance with EPC requirements can lead to significant penalties and other adverse consequences for landlords. The fines for non-compliance can range from £500 to £30,000, depending on the severity and duration of the breach. Here are some key risks associated with failing to comply with EPC regulations:

• Financial Penalties: Landlords can face substantial fines if they do not meet the minimum EPC requirements.
• Legal Restrictions: Properties without a valid EPC cannot be legally let, impacting the landlord's ability to generate rental income.
• Void Periods: Non-compliance can lead to extended void periods where the property cannot be rented out.
• Reputation Damage: Failing to comply with EPC regulations can harm a landlord's reputation.
• Increased Costs: Delaying compliance can lead to higher costs in the long run.

Exemptions from EPC Requirements

Landlords may qualify for exemptions from EPC compliance penalties under certain conditions. These exemptions ensure that landlords are not unfairly penalised when specific improvements are impractical or would significantly alter the property. Here are the primary exemptions available:

• Listed Buildings: If the required improvements would unacceptably alter the character or appearance of the building.
• Temporary Buildings: Those intended to be used for two years or less.
• Industrial Sites: Some industrial sites, workshops, and non-residential agricultural buildings with low energy demand.
• Small Detached Buildings: Detached buildings with a floor space of less than 50 square metres.
• Buildings Due for Demolition: Properties scheduled for demolition within two years.

To avoid penalties for non-compliance with EPC requirements, landlords can apply for exemptions under specific conditions:

• Property Details: Register the exemption on the PRS Exemptions Register, providing detailed property information.
• Reason for Exemption: Clearly justify why the property qualifies for an exemption.
• Supporting Evidence: Submit documentation or reports from qualified professionals, such as surveyors.

Types of Exemptions

• High-Cost Exemption: If the cost of improvements exceeds £3,500 (including VAT), landlords can register for this exemption. Evidence of quotes from at least three suppliers is required.
• Third-Party Consent Exemption: If the landlord cannot obtain necessary third-party consents, such as planning permissions or consent from tenants, an exemption can be claimed.
• Property Devaluation Exemption: If the required energy efficiency improvements would devalue the property by more than 5%, this exemption can be sought, supported by an independent surveyor's report.

Financial Support for Improvements

Several financial support schemes are available to help landlords meet EPC requirements, making energy-efficient upgrades more affordable:

• Green Homes Grant: This scheme provides vouchers to cover up to two-thirds of the cost of energy-efficient improvements, such as insulation and low-carbon heating systems, with a maximum voucher value of £5,000. For more information, visit the Green Homes Grant page
• Boiler Upgrade Scheme: Offers grants for replacing old boilers with modern, energy-efficient models, helping to reduce carbon emissions and improve energy efficiency. Detailed information can be found on the Boiler Upgrade Scheme.
• Local Authority Grants: Various local schemes provide financial support for energy efficiency upgrades. Check with your local council for specific opportunities.
• Energy Company Obligation (ECO) Scheme: This scheme requires large energy companies to fund energy efficiency improvements in households, which can benefit landlords by reducing the costs associated with upgrades. More details are available on the Energy Company Obligation.

Recent Changes to EPC Requirements

The proposed changes to raise the minimum EPC rating requirement to C by 2025 for new tenancies and by 2028 for all tenancies were scrapped in September 2023. This decision came after a review of energy efficiency policies highlighted the financial strain such changes could place on landlords. Consequently, the current requirement remains an EPC rating of E or higher, allowing landlords to focus on maintaining compliance without the immediate pressure of more stringent standards.

Future Outlook

Despite cancelling the proposed changes to increase the minimum EPC rating to C, the UK government continues to emphasise the importance of energy efficiency. Landlords should stay informed about future regulatory updates and proactively enhance their properties' energy performance. Improvements such as insulation, efficient boilers, and double glazing ensure compliance with current standards and increase property value and appeal to eco-conscious tenants. By adopting energy-efficient measures now, landlords can future-proof their properties against potential legislative changes and contribute to broader sustainability goals. If you want to know more, further details are available through the Energy Saving Trust.