New EPC rules are coming, and the cost of non-compliance could be steep. Here’s all you need to know to make sure you’re ready for all the changes that may come your way.
The Government has set itself some ambitious emissions targets over the next few decades – good news for the planet, but they could create challenges for landlords. To meet them, the carbon emissions from all buildings will have to be close to zero by the year 2050. It’s a big leap and in the longer-term properties will have to take their energy efficiency rating up to A. However, it’s the shorter-term goals which should be exercising the minds of many as they get ready for the new EPC guidelines coming into force in April 2018.
UPDATE: Watch our short video about the new EPC rules.
Back in 2015, the Government brought in minimum energy efficiency standards (MEES) for landlords who have residential or commercial properties. So, if you’re renting or selling a property, there is a good chance you fall under its ruling. From April 1st, 2018, any buildings which do so will have to have an EPC rating of at least E. Anything below will not be sold or rented unless you fall into one of the exemptions (more of which later.)
An energy performance certificate (EPC) is a document you must legally have, setting out the energy efficiency of your building. It comes in ratings of A (the highest) to G, (inefficient). It serves as an indication both for you as a landlord and any potential tenants or buyers. They can see how efficient it is which gives them a guide to the quality of the home – as well as the quality of the building itself.
You’ll have to provide this free of charge to the tenant as soon as possible and all advertisements for the property should display the rating as clearly as possible. If your building is currently rated below E, you will have to make changes and have it recertified to ensure it meets the required standards and if you don’t things can get pricey.
Penalties range up to £5,000 and will depend on the severity of the infringement. Here’s how they scale up.
- You provide false or misleading information to the PRS Exemptions Register. £1,000
- Fail to comply with a compliance notice from your local authority. £2,000
- Renting out a non-compliant property for less than three months £4,000
- Renting out a non-compliant property for more than three months £5,000
Any time you’re in contravention, the notice will be published so this is something which could not only hit your pocket but harm your reputation as a landlord.
The trouble is that, while many landlords are becoming aware of the new rules, not everyone is certain about what they must do to comply.
Getting the EPC
The first thing to bear in mind is to act quickly. You should have ordered an EPC inspection before your property goes to market and then have it available within seven days of it going up. There is a grace period of 21 days, but beyond that there are no ‘ifs’ or ‘buts’ – you absolutely have to have one or face the possibility of a fine.
To get one you should have your property inspected by a qualified domestic or non-domestic energy inspector. He or she will then issue you with an EPC or a non-domestic EPC (NDEPC) if you have a commercial property. You should then state this rating on the advertisement and make it available to your tenant as soon as possible.
Once issued, it goes onto a database and is valid for 10 years. However, you might decide you want to have it redone.
For example, if you have made any change to the property and think it deserves a higher rating, this can become a selling point. It’s worth looking at this as an issue of more than just compliance.
Energy efficiency is becoming an increasingly important issue for renters. For some it’s a question of ethics – they want an efficient home, so they can reduce their own carbon footprints, but for most it comes down to the nitty gritty of money.
The low price of oil has eased the pressure on fuel prices for many people, but in an environment in which wages are rising more slowly than inflation they can still bite hard. As we head into winter, the chance to save money on fuel bills will be appealing to many.
How to boost your EPC rating
There are many things you can do as a landlord to push this rating up. Some of the most common items you’ll have to change are air source heat pumps, thermostat boilers, draught-proofing, ground source heat pumps, storage heaters or insulation for hot water cylinders.
You could also replace any halogen or non-low energy light bulbs with a more efficient source such as LED; you could install loft insulation or check your walls for cavities. Windows are a key source of heat loss. Badly installed windows could account for 10% of the heat lost from a room. Making any changes will inevitably cost money but they may pay back with happier tenants, more competition for the tenancies and even the potential for higher rents. They also encourage you to enter into more environmentally sustainable practices which could reduce running costs, and also put you in a good position to comply with any future changes. As we mentioned at the beginning of this article, buildings may one day have to reach a rating of A, so there’s every chance new restrictions will be coming.
For some landlords, though, this will still be a cost they feel they cannot or do not want to shoulder, in which case you can apply to the local council for an exemption. Here are the exemption criteria:
- Consent from a third party has been denied. For example, a tenant might refuse consent or they give it with conditions which the landlord cannot comply with.
- If the changes are not appropriate or would negatively affect the value of the property.
- You’ve made all the changes you can and it is still rated below E.
If you already have a valid EPC, you will not need to get a new one as long as it is not any older than ten years. Of course, you will still have to renew it when you reach the end of that ten-year period.
However, all exemptions will only be valid for another five years and will be subject to review, so it will pay to do as much as possible to comply with the legislation. Whatever you choose to do, though, it’s important to act quickly. Changes are coming and if you’re not ready by April you could find yourself with a property you can’t rent out – and that would leave you with something all landlords dread – a void period with no certainty about when it will generate money again.
It’s natural to feel intimidated by the changes. Not all landlords will welcome them, and many may not know what they can to make sure they are ready in time. However, if you understand your obligations and act quickly, this could become a chance to future-proof your rental properties and increase the yield they provide.
Get an EPC performance certificate with Howsy
When you join Howsy, EPC certificates are among the list of add-ons you can get on top of our standard service. If you don’t have the time to deal with getting an EPC yourself, we will do it for you for £78 inc VAT. We track EPC expiry dates as part of our property management service, and we will send you notifications to let you know when your EPCs and gas safety certificates are about to expire. You can deal with the renewal process yourself, or we can do it for you.
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