What are the rules for rental property landlords concerning Energy Performance Certificates (EPC), and how can you prepare for any potential changes?

Landlords in England and Wales might already be privy to the modifications suggested to raise the minimal Energy Performance Certificate (EPC) rating demanded for rental residences. But if you’re not, then in brief, to meet the country’s goal of Net Zero by 2050, the government held a consultation in December 2020, which proposed that all properties with an EPC rating of A, B or C will be available for letting.

This policy may come into effect for newly-rented properties as soon as 2025, and for those already tenanted, it will start to be applied in 2028.

But if you’re a landlord of a property in Richmond, Putney, Twickenham, or Sheen and this news fills you with dread, fear not, as we’ve spent some time breaking down the core information for you and have solutions for anyone trying to navigate the changes.

What does MEES mean, and how does this relate to property owners?

In 2015, England and Wales initiated the Minimum Energy Efficiency Standards (MEES), which serve as regulations regarding rental properties.

In 2018, MEES decreed that private landlords were not permitted to rent a property with an Energy Performance Certificate (EPC) rating lower than E. Consequently, any homes with a score of F or G had to have their rating upgraded before being put up for rent.

The most recent government consultation proposed that by 2025, the MEES regulations would be strengthened to only permit new rental properties with the top three ratings of A, B or C.

What is the current minimum standard for energy performance certificates that landlords must meet?

In 2018, MEES regulations came into effect, making it illegal to rent out properties with an Energy Performance Certificate (EPC) rating lower than E.

I’m a landlord, so how will the change in EPC ratings affect me?

Rightmove’s survey of 2,500 landlords revealed that over 50% of the rental homes listed have an EPC rating lower than C. 33% of landlords were unaware of the possibility of a rule change. At the same time, almost a third were uncertain of their property’s current EPC rating.

Therefore, checking the current EPC rating if you rent out a property is essential since the demands could be modified. This will allow you to plan any improvements that may be required.

To find your home’s Energy Performance Certificate ranking or to check if you have a current certificate, please check out this government website on Energy Performance Certificates.

Is it necessary to refresh an Energy Performance Certificate during a lease term in 2022?

Properties should have one at all times, this is necessary when it is time to market the property for new occupants, there are changes to an existing tenant’s agreement, or if renovations have been made that are expected to result in a better rating.

It has been suggested that, in addition to the legislative amendments to the EPC for rental residences, landlords must hold a valid EPC continuously, even if the same tenants remain in the same place.

How long does my EPC last for?

No matter how often the property is transferred to different owners or tenants, the Energy Performance Certificate remains valid for ten years.

Can landlords be penalised for failing to possess an Energy Performance Certificate (EPC)?

Local governments are allowed to issue penalties of £500 if you do not provide a copy of the EPC to your tenant, and may increase up to £5,000 in the absence of a legitimate EPC. There is a plan to increase this fine to £30,000 by 2025.

Is obtaining consent from the tenant before scheduling an Energy Performance Certificate (EPC) audit necessary?

A written notification of 24 hours or more must be provided to tenants before an Energy Performance Certificate inspection is conducted per legal regulations.

Do my tenants have the right to receive a copy of the Energy Performance Certificate (EPC)?

You must provide a copy of the EPC to the people who rent from you in compliance with the law.

What steps should landlords take in anticipation of potential alterations to the EPC regulations for 2025?

Take a close look at the current EPC for your rental property. If it needs to be improved, explore how to raise the rating. This could entail installing insulation, swapping out single-glazed windows and doors for double- or triple-glazed ones, or replacing the boiler. For more information on bettering an EPC rating, check out this guide.

When you have finished the alterations, you should quickly arrange an assessment so that the upgraded EPC will show the enhancements.

What is the expense associated with making alterations that would result in an EPC rating of C?

The amount it will cost a landlord to bring their rental property up to an EPC rating of C varies, with the government estimating an average of about £4,700. However, this cost is likely to be far greater for bigger and older homes.

What might occur if I cannot promptly afford the renovations to my rental properties?

Currently, those who have invested up to £3,500 in renovations without being able to bring their property up to an E rating are eligible to apply for an ‘all improvements made’ waiver.

From 2025, landlords may be required to spend up to £10,000 to ensure their rental properties are given a C rating to be eligible for exemption.

What type of monetary assistance is the government providing?

In April 2022, the government declared a zero-rate Value-Added Tax on certain materials meant to enhance the Energy Performance Certificate rating. These materials comprise insulation, controls for heating and hot water, solar panels and heat pumps.

How can Parkgate Estate Agents help?

Britain has a goal to achieve energy self-sufficiency. To accomplish this, the government has mandated shrinking the energy demand and reducing the amount of power imported from Europe.

Alongside these regulations, the government is currently developing a plan to make it extremely difficult for landlords to rent out homes that have an EPC rating lower than C by implementing a £5,000 fine for non-compliance.

For all of these initiatives to be successful, it’s essential for landlords to take time to understand the issues involved, as well as how to make the necessary improvements to their properties to meet the country’s requirements.

If you’re a landlord looking for support, at Parkgate Estate Agents, our award-winning team can help you manage these changes and ensure your properties remain profitable through our first-class letting and property management services.

Alternatively, if you are a landlord looking to downsize your portfolio due to the potential costs of upgrading your properties to meet the EPC standards, our team can guide you through every step to ensure you get the best deal on a sale.

Contact the team today on 020 8940 2991 to discuss your requirements.