Landlords – How to Improve Your EPC Rating – and Why
Published on August 31, 2023 by Sarah Mac
The Royal Institution of Chartered Surveyors (RICS) has launched a consultation with a view to gathering input on its new Residential Retrofit Standard for 2023.
RICS has launched the consultation in response to demand for high quality, residential retrofit advice, which has been prompted by increasing energy prices, as well as UK government net-zero targets.
The consultation looks at recent housing market statistics from the sales and rental sectors. These show that energy efficient homes are generally more desirable, and that they are more likely to retain their value.
Additional benefits in terms of energy efficiency retrofitting include reduced energy consumption and therefore lower utility bills, as well as creating a more pleasant living environment.
A RICS / YouGov consumer survey carried out in July revealed that 36% of homeowners wouldn’t have the knowledge required to improve their homes to make them more environmentally friendly. What’s more, 78% of respondents said they would find it useful if retrofitting advice could be provided during the purchase process.
Landlords, why improve your property’s EPC rating?
There are many reasons why improving the Energy Performance Certificate (EPC) rating of a rental property could make sense, aside from the fact that it is a breach of legal duty to let a property that doesn’t meet the required minimum ‘E’ rating.
As well as being legally compliant, a better EPC rating is likely to appeal more to environmentally-focused tenants, as well as potentially increasing the value of the property.
What’s more, by increasing the EPC rating, landlords will be better prepared for the government’s proposals to change the minimum EPC rating to C for new rental agreements in 2025, and all agreements in 2028.
How to improve the EPC rating of a rental property?
There are various ways in which the EPC rating of a property can be improved, all of which revolve around enhancing energy efficiency:
- Upgrade lighting to energy efficient LED light bulbs
- Replace single glazed windows with double or triple glazing, or install secondary glazing if replacements are not possible
- Insulate walls and roofing
- Hang heavy, thermal curtains at the windows and across the front door
- Upgrade the boiler to an energy efficient combi model or a heat pump system
- Fit underfloor heating to reduce the input temperature
- Install a smart meter to keep track of energy usage
- Consider fitting solar panels to make use of renewable energy
Ahead of starting with any single energy efficiency initiative, consider the costs. It may be that it could be more cost-effective to undertake a whole house retrofit, upgrading heating systems, windows and insulation in one hit, rather than approaching each upgrade independently.
What is the minimum EPC rating for landlords?
Landlords must ensure their properties are at least an EPC E rating. This requirement was introduced under the Domestic Minimum Energy Efficiency Standard (MEES) regulations in April 2020. It applies to all residential private rental properties that are let under an assured, regulated or domestic agricultural tenancy, and that are legally required to have an EPC.
Why must landlords comply with the minimum EPC rating?
Under the MEES regulations, it is against the law to let any property, regardless of when the tenancy started, where the EPC rating is less than E. If it is, landlords must either improve the rating to at least E, or register a valid exemption.
A valid exemption may include:
Devaluation – a temporary exemption of five years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of their property by over 5%.
New landlord exemption – if someone suddenly or unexpectedly becomes a landlord in specified circumstances, then a temporary exemption of six months will apply.
Third party consent – if a landlord is unable to obtain the necessary consent to carry out works to improve the EPC rating, for example from a superior landlord, lender or tenant, then they may be permitted to let a sub-standard property.
Exemptions must be registered on the Online Private Rented Sector Exemptions Register.
Landlords who fail to follow the rules could face a civil penalty of up to £5,000. Local authorities issue fines for non-compliance, which pushes them to enforce the legalisation. Tenants are also able to raise a case with the First-Tier Tribunal Regulatory Chamber if they believe their landlord to be in breach of the regulations.