What Do The EPC Regulation Changes Mean For Landlords?

Over the last few years there has been a lot of talk about Energy Performance Certificates (EPCs) and Minimum Energy Efficiency Standards (MEES). First, the UK government proposed raising the minimum energy efficiency standards for all the domestic rentals in England and Wales, from an E to C and tentatively set an ambitious timeline of 2025.

Under Rishi Sunak this plan was scrapped entirely. Though data suggests many landlords had already made the necessary upgrades to their properties.

For those of you that have begun work to upgrade your properties, don't worry, the money was not wasted. The new Labour government have confirmed they are reintroducing this plan to increase MEES in rentals to an EPC rating of C, but with an extended timeline.

Currently, the minimum energy efficiency standard is allowed for a rental is an E rating for your EPC. The idea is to improve energy efficiency for all homes around the country, reducing carbon waste and progressing the government’s net-zero targets, as well as reducing the energy costs and overheads for renters.

Under the labour governments changes, all domestic rental properties will need to have an EPC rating of C or higher by 2030. Penalties for non-compliance include large fines.

What do landlords need to know about these new EPC regulatory changes?

Key Takeaways to the suggested Energy Performance Certificate (EPC) requirements:

• All domestic rental properties will need to have an EPC rating of C or higher by 2030.
• This is part of the governments ambitious 2050 carbon neutral plan.
• Breaches of these regulations will incur large fines.
• Landlords must to provide an EPC prior to a property being advertised and for a valid EPC to be in place at all times while a property is let.

What Is An Energy Performance Certification Rating?

The EPC rating was introduced for both England and Wales, in 2007. EPC stands for energy performance certification and it rates a property’s energy on a scale from A to G with A being the most efficient.

It is a landlord’s responsibility to ensure that the EPC rating is within the current UK guidelines and landlords need to update the EPC, at least once every 10 years. However, with these new regulations coming into effect it could be much sooner for your property.

A better EPC rating means a reduced carbon footprint and can make your property more attractive to renters and buyers as it means that their bills and utility costs are going to be lower. Ultimately, this means that they will have more money to pay towards their rent and other important living costs.

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 obvious that a lot of people will be affected by this change.

Jumping from an E rating to a C rating could potentially cost landlords £1000s.

Landlords need to formulate a plan to increase their rating and spread out the cost of the necessary upgrades over the next few years to avoid a large single expense.

To improve an EPC rating a landlord can expect to spend money on a variety of things including insulation for the property, heating, lighting and windows. Another important thing to note is that the government is phasing out old school boilers in favour of more energy-efficient options and rentals need to upgrade to these new solutions, not only because they will increase your EPC rating and lower the energy bills of the household, but also because as these older boilers are phased out parts and repairs are going to become increasingly expensive.

Under the Labour governments plans, if you want to advertise a rental from 2030 onwards you will need to ensure that you are compliant with a C rating, or better. You will not be able to advertise your property if you do not have a rating.

Five Ways Landlords Can Improve Their EPC Rating

We’ve mentioned already, there are a variety of ways in which you can improve your property’s EPC rating. But if you want to jump from an E up to a C, you will likely need to implement multiple changes.

Changes that you could look at implementing include:

1. Improving the property’s lighting. Old light bulbs and fixtures are notoriously inefficient and upgrading your lighting fixtures to LED bulbs can lower the overall energy consumption of a household
2. Improving insulation. Insulation is one of the simplest ways to reduce heating expenditures, and the requirements of a household to heat, perhaps all walls, floors and ceilings should be insulated properly for maximum effect.
3. Improving windows. For those properties where it’s possible, upgrading to at least double glazing or preferably triple glazing can help retain heat within the property, allowing for a reduced carbon footprint and less energy required for heating,
4. Installing an energy-efficient boiler. We’ve already mentioned that old school boilers are being phased out for more energy-efficient solutions. It’s well worth doing some research to identify energy-efficient boilers that will be cheap to maintain on an ongoing basis. This will not only lower your tenants heating and water bills but also likely keep your own property maintenance bills down simultaneously.
5. Use a smart meter. Smart meter technology allows you to more easily and accurately control and monitor, the energy consumption of a household. This will allow you to identify areas where energy consumption is large so that you can implement specific changes to help improve your overall EPC rating.

Financial Support for Landlords

‍Labour's "Warm Homes Plan" aims to assist landlords with property upgrades by offering grants and low-interest loans for improvements such as insulation, solar panels, and low-carbon heating systems. This initiative includes collaboration with local authorities, banks, and the private sector to accelerate the pace of home improvements and help landlords meet the EPC C standard.

Concerns and Criticisms Of EPC Changes

‍Despite the plan's positive intentions and the elongated timeline, there remain concerns about the financial burden it places on landlords. Critiques have called for realistic, achievable targets, urging the government to provide additional financial incentives and legislative backing.

EPC Implications for Scotland

‍At present, the new EPC C standards have only been confirmed for England. Landlords in Scotland should stay informed about potential changes to local EPC regulations that may arise in the future.

Future Challenges and Outlook

These plans form a cornerstone of the governments ambitious 2050 carbon neutral target. However, as the 2030 deadline approaches, the Labour government must balance its goals of reducing fuel poverty with providing adequate support for landlords to meet the EPC C requirement. Successfully navigating this challenge will be essential to creating a more energy-efficient and affordable rental market in the years to come.

Using Landlord Studio to Improve The Profitability Of Your Buy To Let Property

As you are making the required improvements to your property acquired energy improvements to your property, you will want to make sure that you carefully track all of the expenses associated with those improvements with software like Landlord Studio.

Landlord Studio allows you to easily keep up to date accurate digital records and carefully monitor and track all of your income and expenses. This will be absolutely vital, especially with making tax digital (MTD) coming into play in 2024.

Additionally, by using our smart dashboard and professional reporting features, you can quickly and easily identify areas of weakness within your buy to let property portfolio, allowing you to make informed tactical decisions to improve your portfolio’s overall profitability.