July 21st, 2022
What do the proposed EPC changes mean for landlords?
If you have been a landlord for a number of years, you will already know that your property’s Energy Performance Certificate (EPC) rating is of huge importance.
A home’s EPC rating is measured on an A – G scale that indicates the energy-efficiency of a home. Since 2018, landlords have been required to ensure all properties starting a new lease have an EPC rating of E or above to meet legal standards.
Now, the government has announced new EPC laws as part of their mission to reduce greenhouse gas emissions to net zero by 2050.
According to MoneyAge, 15% of landlords are unaware of the upcoming EPC rule changes. If you are caught out and don’t improve your property in time, your buy-to-let could be being rented illegally, and you could face significant financial penalties as a result.
So, here is how the new EPC rules will affect landlords, plus simple ways to improve your buy-to-let property’s EPC rating.
Your property’s EPC rating is calculated through a non-invasive home inspection
In order to gain an EPC, a qualified assessor will visit your buy-to-let property and perform an inspection.
The aspects of your property that make up its overall EPC rating include:
- The quality and amount of insulation
- Whether the property has double glazing installed
- The energy-efficiency of electrical features, such as energy-saving lightbulbs
- The type of fuel used to heat the property
- Other additional features, such as solar panels or heat pumps.
Once the EPC rating is calculated, it lasts 10 years, at which time another survey is required to renew the certificate.
From 1 April 2023, all buy-to-let properties will need an EPC rating of E or above
Under the new EPC rating rules, all buy-to-let properties, including those mid-lease, will need to hold an EPC rating of E or above by 1 April 2023.
If your property has been under the same lease for many years and escaped the 2018 new-lease rule tightening, it will still need to be updated before 1 April 2023 in order to meet the legal requirements.
From 1 April 2025, all rental properties will need an EPC rating of C or above
In a gradual crackdown on energy performance standards, the government has also announced that, from April 2025, all rental properties will need an EPC rating of C or above. This rule will apply to new leases only.
For long-term existing leases that pass the April 2025 deadline, landlords will have until April 2028 to make the required changes to improve their EPC rating.
What’s more, new proposals suggest that, by 2030, rental properties may be required to hold an EPC rating of B or above. These proposals remain under review, though, and are subject to change.
So, no matter where your buy-to-let properties sit on the EPC scale, it could be wise to begin preparing for energy-efficient updates well in advance.
3 ways to make your rental properties more energy-efficient
If you need to act soon to improve your rental properties before next spring, don’t panic. Your buy-to-let property’s EPC rating can be improved through a variety of different renovations and installations.
Here are three ways to make your rental properties more energy-efficient before April 2023.
- Improve or replace your property’s insulation
Insulation is one of the most cost-effective ways to make your property more heat-efficient. If your buy-to-let’s insulation hasn’t been replaced in a number of years, it could be having a negative impact on the EPC rating.
What’s more, in his spring statement, former chancellor Rishi Sunak announced a total reduction of VAT on all energy-efficient home installations until 2027. You can read our insights on how to make the most of this potential price reduction on our news page.
If you are not sure where your property’s insulation is most in need of replacing, you can use thermal imaging cameras to identify where the home is losing heat. These can be hired from specialist firms and are often lent free of charge by local councils.
By reinsulating your property, you could find it retains heat more efficiently, improving the EPC rating as a result.
- Replace oil or gas boilers with electric alternatives
Relying on old heating sources, such as running an oil or gas boiler, can reduce your EPC score.
So, before the EPC rules change in April 2023, and then again in April 2025, it may be wise to replace those old heat sources with something more energy-efficient. Electric boilers can help lower your property’s carbon footprint and improve your EPC rating overall.
- Work with your tenants to make the necessary improvements
It may be that your tenants are unaware of the necessary improvements you might need to make. So, one useful step could be to explain the new EPC rules to your tenants, and work with them to achieve the best result for everyone.
For example, if you need to conduct renovations to your property that might obstruct your tenants’ daily life, speaking with them well in advance can be constructive. In addition, encouraging tenants to behave energy-efficiently in the property could help you feel as if you are on the same “team” in this situation.
Get in touch
If you are a landlord and have questions about the EPC rules, or any other buy-to-let issue, contact us today.
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.
Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.