Currently properties only require an Energy Performance Certificate (EPC) rating of ‘E’ or above to be legally rented out.
However, from 2025, it is proposed that Residential Landlords of all newly rented properties will be required to have an EPC rating of C or above. Existing tenancies will have until 2028 to comply with the proposed regulation changes.
It is further proposed that the penalty for Residential Landlords who do not have a valid EPC will increase from £5,000.00 to £30,000.00. This does not consider additional penalties that specific Local Authorities could impose.
These measures are part of the Government’s works to meet their net-zero for carbon emissions by 2050.
The Government website at https://www.gov.uk/buy-sell-your-home/energy-performance-certificates confirms that an Energy Performance Certificate (EPC) is required whenever the property is built, sold or rented and such certificates are valid for 10 years.
An EPC is a legally required document which provides an energy efficiency rating (displayed on an A-G scale) for a property. This rating will take into account the current and potential energy performance of the property and its services.
An EPC will also contain recommendations as to the how the energy use of the property could be reduced. If a property has an EPC, this can be located on https://www.gov.uk/find-energy-certificate.
There is no doubt that many Residential Landlords will be caught unawares or face high costs in order to increase their EPC ratings with property improvements.
However, the proposed changes, although undesirable by Residential Landlords, are welcomed by buyers and tenants especially when considering the considerable increases in energy prices, cost of living crisis and general energy efficiency. One upside is that the improvements could have a positive effect on the property’s value, or at least improve the attractiveness of the property to prospective tenants.
Under the current rules, if landlords cannot improve the property rating to E for £3,500.00 or less, they should be able to make all the improvements which can be made up to that amount, thereafter, registering for an ‘all improvements made’ exemption.
However, under the proposed changes this threshold could potentially increase to £10,000.00, with the Government estimating the average cost to Residential Landlords of making improvements to reach an EPC C rating is around £4,500.00.
There are many ways to improve EPC ratings. This could include:
Changes to the EPC regulations are only proposals at this stage and it is yet to be seen whether these are to become law as stated above or with further proposals.
Therefore, there is no legal urgency for Residential Landlords to make such improvements to their properties. Nonetheless, these improvements could save Residential Landlords cost and stress, especially once the changes do become the new regulations, and deadlines are set for the improvements to be made.
For more information please contact our Residential Property department here.
The above is meant to be only advice and is correct as of the time of posting. This article was written by Zeliha Sari, Trainee Solicitor in the Residential Property team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of March 2023.