As the UK government ushers the private rental sector into a greener state, pushing changes to the Minimum EPC rating, many landlords have been left scrambling to keep up.
All tenancies in England and Wales must have an EPC rating of at least ‘E.’ This embraces the government’s green initiatives by making tenancies more energy efficient; with tenants welcoming these changes thanks to lower running costs.
Not only does an energy performance certificate provide landlords with an overview of how energy efficient their rental property is, but also offers practical guidance on how landlords can increase their EPC rating. This is referred to as the recommendations report and will be issued alongside every EPC by the assessor that conducted the inspection. These will typically comprise recommendations that require varying degrees of renovation to the property itself, alongside ways in which the tenants can determine more about the property’s efficiency.
Common ways in which landlords increase the EPC rating of their rental property include:
Whilst each of these will have varying degrees of success in increasing the energy efficiency of a rental, these are the essentials and with each of these steps in place, a higher EPC rating and lower running costs will be in sight.
Owners will only need to obtain a new energy performance certificate for their rental property every ten years. However, it is likely that over this decade new innovations in efficiency and the expected wear and deterioration of the rental could mean that a property that reached the MEES on its last inspection, could fall short of the mark ten years on.
With this being said, providing that the rental property achieved an EPC rating of an E or above, the certification is valid over the usual period, regardless of if this is during a tenancy. However, do landlords need to renew their EPC if it expired during a tenancy. Simply put no, the limitations are placed on advertising the property to new tenants, therefore landlords can obtain a new certificate once their existing fixed term has come to an end.
As mentioned, although landlords are only legally required to renew their energy performance certificate once every ten years, they are prohibited from advertising their rental opportunity to aspiring tenants if they do not possess a valid EPC. If the landlord still tried to let out the property despite not having a valid EPC then if they are reported to Trading Standards they can be fined £200 if they fail to produce the necessary documentation.
With the introduction of the Minimum Energy Efficiency Standard coming in 2018, demanding that all rental properties being let first required an EPC rating of at least an “E” grade. Whilst these initial measures first applied to any new tenancies created after the 1st of April 2018, on the same date in 2020, the Minimum Energy Efficiency Standard applied to all existing tenancies.
Current suggestions from the UK government show that the Minimum Energy Efficiency Standards is set to increase once again in 2025. This will see the minimum EPC rating for renting a property change from an “E” rating to a “C”. From the 1st of April 2025, the new minimum EPC will be applied to all new tenancies, moving to encompass all existing tenancies by the 1st of April 2028.
The proposal also suggests increasing the amount landlords are expected to invest into their rental property in order to increase its energy efficiency, bringing the amount up from £3,500 to £10,000. Further to this the penalty for a landlord that neglects to have a valid EPC in place for their property will soar from £5,000 to £30,000.
With this being said there are circumstances under which the landlord is not obligated to provide an energy performance certificate. Owners do not have to produce a valid energy performance certificate if construction of the rental is still underway, they are able to demonstrate that the property is exclusively suitable once extensively refurbished or demolished, or if they do not wish to rent to the prospective tenant. Certain types of buildings are also exempt from needing an EPC however these are rarely found in renting typically accounting for places of worship, sites of historical value, or industrial sites.
If a landlord is found to be letting out a rental property without first obtaining a valid energy performance certificate for under three months, then they could face a fine of up to £2,000. However, if the owner of the property has been renting to occupants for over this period, then the maximum fine is increased to £4,000. With this being said landlords can face further financial penalties of £1000 for misleading authorities and tenants with a false exemption, and up to £2,000 for neglecting to act on a served compliance notice.
The government has recognised that there may be occasions when it might not be practical to boost a property’s energy rating and has therefore allowed landlords to register for exemptions to the Minimum Energy Efficiency Standard, allowing them to continue letting their rental property. However, in order for these exemptions to be valid, the landlord must provide details of the property, a valid EPC, and detail the registered exemption to the PRS exemption register.
Landlords are able to submit an “all relevant improvements made” exemption if they have funded improvements to their property up to the limit of £3,500 and their rental is still not over the MEES. If successful in gaining the exemption the landlord will have to obtain another EPC in only 5 years or register for further exemption if still not at the appropriate EPC rating.
If the suggested alteration to the property in order to increase its energy efficiency surpasses the financial threshold of £3,500, then landlords can apply for a “high cost” exemption. However, this requires the cheapest measure to exceed this amount, and once again will only exempt the landlord from obtaining an EPC for five years.
Providing the landlord is able to show that the recommended changes would significantly devalue the property, they are unable to get the necessary consent to make the needed changes to the building or if the changes exclusively comprise installing wall insulation, further exemptions can be applied for by the landlord.
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