Despite the government scrapping proposed new energy efficiency standards on rental homes, landlords still have a legal requirement to ensure their properties have an Energy Performance Certificate.
Landlord EPC requirements were due to change in 2025, when former Prime Minister Rishi Sunak planned to introduce higher standards for rental properties. However, he later did a U-turn, citing the economic crisis as the reason.
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The then PM felt upgrading older properties to new standards may be too much for already struggling landlords, as some may have to spend thousands of pounds on refurbish.
Regardless of the new regulations being shelved, landlords are still required to comply with existing legislation, amended in 2018, to ensure minimum energy use requirements are met.
What is an EPC?
An Energy Performance Certificate provides a rating from A to G for every home, with A having the highest level of efficiency and G the lowest. It gives buyers and new tenants an idea of the energy costs they may face and the potential impact of their property on the environment.
The government launched the legislation to promote energy efficiency, assessing factors like windows, heating systems and insulation. It provides recommendations on how to reduce energy usage and carbon emissions, while helping tenants save on energy bills.
When a property is sold, or when a landlord rents it out, an EPC is required by law. Statistics show a property with a good EPC rating can attract a higher market value.
When did this come into effect?
The government introduced the Minimum Energy Efficiency Standards in 2015 in England and Wales. They were updated in 2018 to make it illegal for a private landlord to rent out a home with an EPC rating of less than E. Any landlords with a rental property rated F or G must carry out improvements to reach the minimum E standard before they can offer it on the rental market.
Landlords expressed relief in September 2023 when the Prime Minister reversed his plans to introduce higher mandatory EPC requirements in 2025. In 2028, the new rule would have been applied to existing rental properties too. Many landlords had feared the cost of having to upgrade their entire portfolio would put them out of business.
Depending on the property’s size, the government estimated the average cost per home for a landlord to attain an EPC rating of C would be £4,700. However, for older and larger homes, the cost could be significantly higher.
How does a landlord get an EPC?
The landlord must contact an accredited assessor to provide the EPC through the government’s Gov.uk website before they can let the property to new tenants. The service is available in England, Wales and Northern Ireland.
The price of having an assessment varies, depending on the property’s size and the individual assessor’s costs. There will be an inspection of each property and the landlord will be provided with a digital EPC certificate. If the rating is below the minimum standard of E, the landlord can check whether the property is eligible for an exemption.
The government’s guidelines state a property can be exempted if it’s a temporary building being used for two years or less, if it’s a detached property with a floor space of up to 50 metres, or if it’s due to be demolished. There are other exemptions relating to business premises and places of worship.
Should you renew the EPC for existing tenants?
An existing EPC lasts for ten years and if the same tenants are living in your rental home, with no changes to their tenancy agreement, there is no legal requirement to renew their EPC. The only time it must be renewed is if you plan to rent out the property to new tenants. In addition, if you’ve made any home improvements to achieve an improved rating, you can have the property reassessed to reflect this change.
Tenants are entitled by law to receive a copy of the EPC – landlord can be hit with a fine of £500 for failing to give the tenant a copy of the EPC, or for not having an EPC assessment. They must also be given at least 24 hours’ notice, in writing, of an impending EPC assessment.
What if the landlord can’t afford improvements?
The current law states that if a landlord makes improvements costing £3,500, but still can’t reach the E energy rating, you can register for an exemption under the “all improvements made” category.
Register via the government’s website if you have spent this sum already, or if there are no further improvements that can be made. In these circumstances, you may be issued with an exemption that lasts for five years.
When it expires, you must make another attempt to improve the property to E standard. If this still isn’t possible, you can reapply for another “all improvements made” exemption.
Is the government offering financial assistance?
If you’re planning to rent out a property but you find out it doesn’t meet the minimum EPC standards, it can be an expensive business putting this right.
In April 2022, the government’s Spring Budget announced zero VAT on some materials being used to improve EPC ratings. These included solar panels, heat pumps, insulation and controls for hot water and heating.
Some local councils may offer financial incentives for landlords to carry out energy-efficiency improvements, but this will vary from region to region. Contact your local authority to see if anything is on offer in your area.
Try to make savings in other areas, such as in the provision of landlord furniture, by choosing buy-to-let furniture for landlords from a reputable supplier. This can be more cost-effective and less hassle than buying or renting items individually from different sources.
Landlord and tenant organisations say there shouldn’t be any concerns about keeping the minimum EPC regulations in force, rather than making it mandatory to improve standards in 2025. Speaking after the government’s decision to scrap the changes, Tasca Kruse, residential lettings manager of Brown & Co lettings agency, said it was good news for the market.
She believed it would ensure landlords didn’t have to sell, claiming the new legislation would have “put the rental market into crisis”. The current EPC regulations “ensure all properties are warmed sufficiently”, she added, ensuring the rental market remains active and continues to move forward after the recent economic crisis.