EPC rating changes for rented properties – guidance for landlords
New regulations will make it unlawful to let residential or commercial properties with an EPC rating of F or G. The legislative changes will take effect from 1 April 2018 for new lets and renewals of tenancies, and from 1 April 2020 for all existing tenancies. Property expert Kate Faulkner shares her tips for increasing the energy efficiency rating of your rental property.
The more energy efficient a rental property, the cheaper your tenants’ utility bills and the more likely they are to be able to afford the rent. So even if your property meets the new Minimum Energy Efficiency Standard, it is always worth seeing what you could do to improve your rating.
What is an EPC?
The EPC - Energy Performance Certificate - is a document that confirms the energy efficiency rating of a property. To obtain a certificate, a Domestic Energy Assessor will need to take a look at your property and review various aspects, including:
- the size and type of construction
- the heating system - how it’s controlled and the type of boiler you have
- existing wall and loft/roof insulation – how it compares with current standards
- any alternative heating and energy-efficient products in place
- double glazing – windows and doors
Using this information, the Domestic Energy Assessor will calculate the property’s energy efficiency and grade it on a scale from A to G, with A being the most efficient. The certificate shows both the current level of efficiency and the grade that could be achieved if improvements were made.
In October 2008, legislation came into force requiring every property to have an EPC before being marketed for sale or rent, with the certificate being made available to prospective tenants and a copy given to the tenant when they move in.
The certificate is valid for 10 years, so don’t forget to check when yours needs to be renewed. If you’re not sure where the certificate is filed, you can check the EPC register for free.
Since 9 January 2013, it has also been a legal requirement for all advertisements for rental properties to clearly show the energy rating. This allows tenants to see which properties are likely to be more energy efficient and will therefore incur lower heating bills. If you have a property which has a D rating or higher, always let the tenant know during viewings. This is the average rating, so if yours is better it means your tenants’ energy bills are likely to be lower.
What are the new energy efficiency standards from 1 April 2018?
New Minimum Energy Efficiency Standards are coming into force shortly, requiring rented properties to have an EPC rating of E or above.
The regulations have been introduced to ensure tenants are able to enjoy a better living environment and lower heating bills. Properties rated F and G waste energy, which imposes an unnecessary extra cost on tenants and contributes to avoidable greenhouse gas emissions.
So, from 1 April 2018, landlords will not be able to let or renew the tenancy on a property rated F or G on the EPC; for existing tenancies, the property must meet the standards by 1 April 2020.
Last year, the government estimated that one in ten rented properties had an energy efficiency rating of F or G. These properties could soon become unlettable unless landlords have taken steps to bring these ratings to E or above.* If your property falls within that 10%, read our recommendations below for the best energy efficiency improvements you can make.
Does every rented property need to have an energy efficiency (EPC) rating of E or above?
No, there are some exclusions and exemptions, although the reality is that most properties let within the private rented sector will be required to comply.
Under certain circumstances, the landlord may qualify for an exemption, which must be registered on the Public Exemptions Register. Examples of possible exemptions include:
- if a sitting tenant refuses to give consent for improvement works to be carried out
- if carrying out the necessary works would devalue the property by more than 5%.
In addition, the requirement to comply only extends to ‘appropriate, permissible and cost-effective’ improvements.
Some domestic buildings are excluded from the scope of the requirements, including:
- Residential buildings intended to be used for less than 4 months a year
- Temporary buildings with a planned timed use of 2 years or less
- ‘Stand alone’ buildings with a total usable floor area of less than 50 sq. metres
- Certain protected or listed buildings and monuments.
If a property does not have an EPC, or the EPC has expired without there being a further trigger requiring one to be obtained, the property will fall outside the scope of the regulations.
For full information on exempt properties, see Chapter 4 of the government’s guidance document for private rented sector landlords.
Energy efficiency improvements you can make
Here are the top 5 ways you can improve the EPC rating of your property:
1. Insulate the loft or roof
Much of a building’s heating can be easily lost if the roof space is not properly insulated to the recommended thickness of 270mm. So check the thickness of your loft insulation, and install or increase, if necessary.
The cost for a three-bedroom, semi-detached house that currently has no loft insulation is around £300 (£240 for a ‘top up’), although you can significantly reduce this by buying and fitting the insulation yourself. If your loft is used as living space, you will need to insulate the pitched roof itself, which is not as straightforward, so it’s advisable to employ a professional fitter.
2. Insulate the walls
The property’s heat can also escape through the walls, if not properly insulated. For most properties, cavity wall insulation is injected from outside into the space between the inner and outer brickwork.
The insulation needs to be professionally installed and will cost around £475 for a three-bedroom, semi-detached property (around £100 less for a mid-terrace). If the property has solid walls, take professional advice, as the cost of insulating will run to thousands of pounds – possibly more than £10,000 for larger houses.
3. Exclude draughts
It’s a good idea to inspect your property, so that you can locate, and deal with, any unwanted gaps where air can escape. These may seem like small changes, but they can make a real difference. You should check the following places:
- Under doors – you can fit a simple brush strip at the bottom of the door for just a few pounds.
- Around windows – if you can afford to install double glazing, this is by far the best option, which should also increase the value of your property. If that’s not within your budget, there are other options, such as using foam.
- Via the letterbox opening – fit a plate to stop cold air coming in. Again, these cost very little.
- Keyholes – fit metal discs that cover the keyhole and slide easily to the side when you put the key in.
- Fireplaces – if the fireplace is not used, you can fit a chimney draught excluder yourself or have a professional cap the chimney pot.
The caveat is that all properties need ventilation to allow some air to circulate, particularly in rooms where moisture is produced, such as bathrooms and kitchens, so don’t seal these windows. Instead, you can put seals on the internal doors to prevent warm air escaping from the rest of the house via these rooms.
4. Upgrade the boiler
Maintaining an older model boiler can often be expensive. According to the Energy Savings Trust, you could reduce your bills by over £100 a year if you purchase a new one. A new boiler also has the benefit of coming with guarantees and warranties, so can save you money in the first few years on maintenance.
Speak to a plumber who is Gas Safe registered and experienced in fitting boilers in rented properties. Some are landlords themselves and keep up to date with the latest laws, so will be able to advise you on the most appropriate boiler for the number of tenants.
5. Put in low-energy lighting
Installing low-energy LED or CFL lighting is a quick and easy way to make a saving on electricity bills. And there’s no need to worry about rooms being too dim for your tenants - technology has come a long way in recent years!
Penalties for non-compliance
If your buy-to-let property doesn’t comply with the new regulations, the consequences could be severe. Your local authority can impose a civil penalty of up to £4,000 and, if the property still isn’t up to standard after 3 months, you can be fined up to 20% of the rateable value. On top of that, you could lose a significant amount of rental income for the period of time that your property is legally unlettable.
What help is there for landlords?
Although the ‘green deal’ was withdrawn in 2015, there are still some government grants available to either part or fully fund loft and wall insulation.
You can use the government’s online energy grants calculator to find out whether you are eligible for help. You can also call the Energy Saving Advice Service on 0300 123 1234 for advice and information about what’s available in your area and whether you would qualify for any financial assistance.
Your tenant may also be eligible for an insulation grant, so it’s worth enquiring and coming to an agreement about paying any balance due. It’s important to remember that your tenant cannot instruct any improvement works without your written permission.
For landlords in Scotland, there are various loan schemes available – see the Energy Saving Trust website for more details.
If you don’t currently have an EPC or need a new assessment, you can search for a local energy assessor on the Department for Communities and Local Government website. Alternatively your agent may be able to do this for you, but do shop around as EPCs can be quite competitively priced.