What do the new EPC rules mean for Landlords?
New EPC rules are expected to come into force in 2025 for new tenancies, and in 2028 for all tenancies. The changes to EPC regulations mean that all rental properties must have a minimum EPC rating of C, or be considered unlettable. The government first discussed the amendments in December 2020 as part of their strategy to reach net-zero by 2050.
However, recent research shows that many landlords are concerned about the impact of these new rules, yet others are still unaware of them. The revision to EPC rules also comes during a time of rising energy prices and mortgage chaos, further adding to the turbulence. Although they aren’t enforceable for another couple of years, many landlords will need to act quickly.
We cover everything you need to know about the new EPC rules:
What are the changes to EPC regulations?
Currently, rented homes are required to have an EPC rating of E. For perspective, the range of EPC ratings is from A to E, whereby A are the most energy efficient homes, and E the least. Therefore, landlords were not required to have energy efficient homes in to rent their properties to tenants. This is now changing, where rental properties must have a minimum EPC rating of C as of 1st April 2025. This will apply to all new tenancies, however landlords will have another three years to ensure their homes meet the minimum EPC requirements for existing tenancies.
Other changes include the penalty landlords will face for not meeting the requirements. Presently, landlords face a £5000 fine for not having a valid EPC. In 2025, this figure will be raised by 500% to £30,000. This is a fine that many landlords do not, or cannot, face.
What impact will new EPC rules have for landlords?
It’s fairly difficult to say what will happen, but there is a real concern that many properties will subsequently become ‘unrentable’. Consequently, landlords unable to rent their homes may look to sell their properties, however this is also proving difficult given the current chaos surrounding inflated mortgages. Therefore, many landlords with properties with substandard energy efficiency are facing almost impossible situations, where they are left with ‘unrentable’ and ‘unsellable’ homes.
The change in legislation to MEES (minimum energy efficiency standard for commercial buildings) has also been described as problematic, as many believe it has not been clearly communicated. Landlords don’t fully know what is expected of them or what is going to happen, and recent research found that as many as 15% of landlords weren’t aware of the new EPC rules at all. This study also highlighted that a large proportion of landlords (36%) have pre-war properties, meaning they would likely need to make changes to achieve a ‘C’ EPC rating. Finally, Shawbrook Bank pointed out that a quarter of landlords had a ‘D’ EPC rating and 27% didn’t know their property’s EPC rating.
This arguably demonstrates how new EPC legislation may create challenges for landlords, and that there is a clear gap in landlord’s understanding of impacts. With many unaware of their EPC rating, it is likely that they are also unaware of what work may need to be done on the property in such a short time. Furthermore, landlords without available finance to make these changes may suddenly face no income as of April 2025. As of yet, there is little information on any financial support for landlords to address this legislative change. Moreover, many energy efficiency improvements to a rental property are likely to require tenants to vacate the property while they are being carried out. This, understandably, can be difficult to execute.
What impact will new EPC rules have for tenants?
The research by Shawbook Bank pointed out that the impacts of new EPC rules will likely be felt by tenants too. The majority of landlords surveyed in their study claimed that they would pass on some of the costs of improving their property’s energy efficiency to the tenant. In London, this figure was 68%, showing how landlords in the capital would likely struggle to afford the necessary repairs in the short term, and the importance of adequate financial support. Ultimately, the revised MEES could mean that tenants will be required to pay higher rent.
Despite these issues, there are some potential positive outcomes of changing EPC rules for rental properties. The change was introduced by the government to help them meet the net-zero target in 2050. Therefore, it is the hope that the UK will produce less carbon emissions as a result. Landlords who are able to afford to make properties more energy efficient are likely to reap the benefits in the long term too. Sales Director of Shawbrook Bank, Emma Cox, believes that making these changes will make their property more commercially-viable in the short and long run. In other words, making energy efficient improvements to a property to obtain a minimum ‘C’ EPC rating will – hopefully – be worth the investment.
How to get an EPC rating
If you don’t have an EPC certificate and want to find out what EPC rating your property has, you can organise for a qualified and accredited surveyor to visit your home. At CJ Bloor, we carry out EPC assessments on residential and commercial properties. The inspection usually lasts around 30 minutes depending on the size of the property. This means that if you’re obtaining a commercial EPC, the inspection can be carried out with minimal disruption to existing tenants.
How do I get an EPC ‘C’ rating?
This is something that can be discussed during an EPC assessment carried out by an industry expert. The modifications needed to achieve an EPC ‘C’ rating will depend on your individual property’s condition and characteristics.
However, some of the most common ways an EPC rating can be improved are:
- insulation (floors, walls, loft),
- purchasing a new condensing boiler
- using lower energy lighting
- double glazing
- efficient domestic appliances
- solar panels
Not all of these will be required to achieve a ‘C’ rating, however these are the areas an EPC surveyor would look at. For more information on obtaining an EPC, or to book, get in touch with our expert team at CJ Bloor today.