There have been a few changes to the EPC process for landlords over the past few years, the most recent of which have caused a bit of a stir. With plans being postponed with little notice beforehand, some landlords have found themselves spending as much as £3,000 to get their properties up to code, for no immediate impact. Understandably, 54%* of landlords feel frustrated about the plans being scrapped, however, a further 72%* said they agree that raising energy efficiency is a good thing.
Are you still confused on the latest rules and guidance on EPCs? In this piece, we’ll detail exactly what an EPC rating is, some key things that landlords should be aware of, as well as clear up any confusion on recent changes.
EPC stands for Energy Performance Certificate.
They were introduced in 2007 as part of a directive enforced by the European Union, which itself was introduced to improve the energy performance of buildings found within the Union.
Although Britain is no longer a part of the European Union who introduced the directive, it’s a legal requirement for every home sold or let in the UK to have a valid EPC rating in place.
As a home buyer, an EPC is often included within a Home Information Pack as part of the sale, whereas landlords are instructed to provide new tenants with a valid EPC for the duration of their stay.
A good EPC rating can potentially be an attractive prospect for some tenants and new owners.
To gauge the level of energy efficiency held by a property, EPCs are rated in accordance with an alphabetical scale which ranges from A to G – A being the most efficient, G being the least.
Having a high EPC rating comes with two benefits: the first of which being lower expenditure on energy bills. The second being the potential for perhaps adding perceived value to the property in question.
According to Mortgage Advice Bureau, improving an EPC rating from F or G to a C could add approximately 19.6% in value to a property.
EPCs are calculated independently by qualified, accredited assessors. These people are responsible for inspecting a property to ensure an accurate rating is given, in addition to practical advice that could be used to improve a rating from one band to the next.
The process undertaken is referred to as a Standard Assessment Method (SAM). SAMs consider the property’s build quality, size, shape, use, heating and hot water system, type and quality of insulation, as well as other factors.
Assessors conduct their analysis while visiting the property, and the average assessment takes anywhere from 30-40 minutes to complete.
Over the last few years, plans were made to ensure that any property being let met a minimum EPC rating of C.
This change would have caused thousands of landlords to take action getting work done on the properties they own, resulting in thousands of pounds being spent on improvements and assessments.
Later in the year, these plans were abruptly reversed for these very reasons. As a result, landlords have been permitted to stick to their minimum rating of E in England and Wales.
If you are one of the landlords that has spent thousands in preparing your property for the newfound regulations, to only be met with a complete reversal, you may feel understandably short-changed. But fear not, your work has not been in vain. A high EPC rating comes with plenty of benefits, such as:
A high EPC rating is often associated with savings on energy bills, as more efficient homes do a better job of holding onto heat – reducing the amount of energy needed to keep the house warm.
As a landlord, you may not have direct enjoyment of this benefit; but your tenants will. Houses with higher EPC ratings have the potential to be attractive to renters. Plus, given the current state of the cost-of-living crisis, people could even think about prioritising energy efficiency over other factors such as space or maybe even location.
Keeping an existing tenant is a much more desirable position to be in as opposed to finding a new one.
Amidst listing fees, credit checks, contract signings and the plain fact of not knowing much about your new tenant, landlords often choose to try and keep their current tenants for as long as possible.
It is possible that homes with better energy ratings could encourage tenants to stay put longer; lower energy costs are certainly very appealing. In such a case, a tenant may think twice about moving out when looking at the overall cost of doing so.
Any homeowner can attest to the continuous list of improvements that they wish to make – it’s never ending! But, with energy efficiency crossed off your list, a lot of landlords can find peace in that their homes are going to withstand a lot of use, for a longer time.
Landlords, we’ve got your back. You can learn more about our buy to let mortgages here.
* Research conducted, on behalf of Aldermore bank, by Opinium between 4 – 9 November 2023, with 500 UK landlords.
Subject to status. If you fail to keep up with payments on your mortgage a ‘receiver of rent’ may be appointed and/or your rental property may be repossessed.