New Energy Performance Certificate Regulations – Landlords Beware!
By the end of 2025 all new commercial and residential tenancies will be required to have a valid Energy Performance Certificate (EPC) rating of C and by 2028 this is scheduled to extend to include all existing tenancies. The regulations are part of the UK government’s ambitious net zero emission targets, which, although may be beneficial to the environment, present a number of challenges to the private rented sector.
An EPC measures the energy efficiency of a property on a traffic light system of A-G with A being the most efficient rating. It also provides information about a property’s energy use and costs, along with recommendations on how they can be reduced.
There are a number of ways to improve the energy efficiency of a property, which include but are not limited to:
- increasing loft insulation;
- adding cavity wall insultation;
- replacing old boilers with energy efficient ones;
- installing double glazing;
- and installing energy efficient lighting such as LED bulbs.
Although there are a number of proactive measures landlords may take to improve the EPC rating of their properties, the regulations present financial and practical challenges. It is estimated that the average cost to comply with the new rules per privately rented home will be £7,646. This cost will likely be higher for the large proportion of private rented sector properties that are pre-war and terraced, which will typically require more extensive improvements to raise their EPC rating.
However, tenants may also face financial implications due to many landlords increasing rent in order to fund the necessary improvements to comply with regulations and maintain the commercial viability of their properties.
Data published by Nationwide suggests that 60% of the UK’s housing property is rated D or below. This is an alarming statistic considering that landlords who fail to meet the regulations risk being unable to take on new tenants and many landlords are unaware of the current EPC ratings of their properties. Experts also suggest that properties with a rating below C will become “simply un-mortgageable” and, therefore, it is vital that landlords take important steps now to comply with the regulations.
Article by Alicia Langley