How do I increase my EPC Rating, or why is my EPC rating so low are questions regularly poised by landlords looking to meet the MEES. With the heavy financial repercussions that come with non compliance it is in the best interest of landlords to increase the energy efficiency of their property, if nothing else to attract a new wave of environmentally conscious renters.
An Energy performance Certificate or EPC is an official document implement by the UK government that provides prospective tenants and local authorities with an evaluation of the rental properties energy efficiency. Whilst a landlord is only required to obtain a new energy performance certificate for each of their properties once every ten years, the document must be given to any tenants that request to see the rental’s energy efficiency during a viewing, when requested by a body of the local council, and at the outset of every new tenancy period.
Alongside a review of the rental’s carbon neutrality, an EPC also details the estimated running costs for the property and any arrears where improvements could be made to its overall energy efficiency. Each assessment that a rental property undertakes for an EPC rating must be conducted by a certified EPC assessor or a Domestic Energy Assessor. Once the inspection of the property has been completed the landlord will be provided will an EPC rating that defines the energy efficiency of the property on an alphabetic scale from A to G. The Closer to “A” a rental property achieves during an EPC assessment, the more energy efficient it is considered to be and the less measures a landlord will be required to make to “future proof” the rental property for its next inspection.
Whilst landlords are provided with recommendations on how to improve the overall energy efficiency of their rental, these suggestions may be out of the immediate financial reach of the property owner, or perhaps the necessary work is a large undertaking. However, there are smaller, more common steps a landlord can take to improving the energy efficiency of their property that will make a significant difference in helping the rental achieve the Minimum Energy Efficiency Standard.
It is also essential for landlords to consider that as their property is only assessed every 10 years, the measures they have employed to make the rental more energy efficient may not be as effective as the day they were installed a decade ago and remedial work may be needed.
Perhaps one of the most popular methods employed my landlords to increase the energy efficiency of their rental property, is having new insulation installed throughout the walls and loft of the property. Considered by many to be more costs effective and cheaper than many of the alternatives to increasing the EPC rating of a property, increasing the insulation throughout the cavities of the rental can significantly increase the energy efficiency of a property. However, it is worth considering that the amount a landlord can expect to pay will vary drastically between the type of properties and the individual structure each insulation procedure would have to cater to.
It could be argued that installing double glazing windows is not as effective as updating the insulation throughout the rental, however this would come at far lower cost to the landlord than the alternative. However, it is worth noting that one of the aspects that an assessor will look for when evaluating the energy efficiency of a property is how well the structure retains heat, making it well worth the investment for landlords.
Whilst this may make a minimal change to the overall EPC rating that a property will achieve, if it is a matter of “getting the property over the line” to achieve the minimum energy efficiency standard, it may be worth considering upgrading the lighting across the property to energy saving light bulbs. Not only could this subtle change make all the difference but could result in the long term savings for the rental property owner through reductions in utility bills.
One of the largest contributors to a more energy efficient rental is an increasingly efficient heating system. Whilst this may not be the cheapest way for a landlord to increase the energy efficiency of their property it could potential gain them an additional 20 SAP points, certainly making the expenditure worth it. Aside from having the potential to increase the EPC rating of a rental by 2 grades, a more efficient boiler will undoubtedly reduce the amount occupants can expect to pay each year in their household bills.
The emphasis utility providers and the UK government have placed on home and rental property owns to have a smart meter installed over recent years has been impossible to ignore. Whilst this certainly isn’t the route a rental property owner should go down to radically improve their EPC rating, installing a smart meter could yield brilliant results when reducing the energy expenditure of the rental as tenants will be made more aware of their usage.
With this being said, the overall EPC rating a rental goes on to achieve is of much more significance than simply lowering the utility bills for the many tenants that will reside there over the years. Introduced in 2018, the Minimum Energy Efficiency Standard, or MEES, sets out a grade of energy efficiency that each of the landlord’s properties must obtain before the opportunity is advertised to tenants. As of April 2020 any rental property that is being let out to tenants must first achieve a minimum EPC rating of “E”.
Naturally, not all rental properties will be able to reach this mark, and if this is the case a landlord must make sufficient improvements to the rental property before hosting the opportunity to tenants. As mentioned, these recommendations will be contained within the Energy Performance Certificate provided to the landlord at the close of the inspection.
Whilst it is widely recognised that the rental sector must make a shift towards a more energy conscious and green future, these changes have not been met with open arms by landlords and for good reason. When the reforms were introduced, the UK government made it clear that any necessary work that needed to be carried out to a rental property to help the Minimum Energy Efficiency Standard be met would come at no cost to the landlord. As can be expected, this was not upheld and property owners were not happy to be taking on an additional mandatory cost.
It goes without saying that many of these suggested improvements could rather quickly turn into a very costly endeavour for the landlord, especially when they are unable to count on an income as the property cannot be occupied until the MEES is achieved. However, a cap has been placed on the amount a landlord will have to spend in order to improve the energy efficiency of their rental. The monetary threshold that a landlord must spend when trying to increase the energy efficiency of their rental property has been set at £3,500, but if after these efforts the property still falls short of achieving an “E” rating, the landlord could site an exemption and still be able to let out their rental property. Similarly if a landlord looks to implement one of the recommended charges to their property and the cheapest quote they receive for any of these suggested improvements is over this spending cap of £3,500 a landlord can site a “High cost” exception, potentially allowing them another 5 years in which to meet the Minimum Energy Efficiency Standard of an “E” rating.
As mentioned, the purpose of an energy performance certificate is to provide the viewers of the document with a simple to understand glance at the energy efficiency of what could soon become their future home. To make the overall energy efficiency of the property more immediately assessable for potential tenants, each rental is divided into alphabetised “bands” ranging from “A” to “E”. When determining which band a rental property should be categorised as, the assessor will inspect the rental for any signs of heat loss, poor insulation, the efficiency of the heating and water system is throughout the property, alongside any double glazed windows, or energy saving light bulbs.
Once these considerations have been made by the assessor, a score will be given for each aspect of the rental’s energy efficiency. These individual scored are then accumulated, with the total score achieved by the property determining the overall energy efficiency rating it receives. For a rental property to reach the minimum energy efficiency standard of “e”, it must obtain a score of at least 39 SAP (standard assessment procedure) points, with the highest rating of “A” coming with at least 92 SAP points.
With the initiative behind the Energy Performance Certificate, the Energy Performance of Buildings certificate of Inspection Regulations 2007, the move dictated that any building that has been constructed, marketed for sale, or to tenants for rent must by law have a valid EPC in place. To this end, since the 1st October 2008 all landlords have been legally required to provide any prospective tenants viewing the property with a copy of the current EPC in order to offer them a more transparent evaluation on the accommodation’s energy efficiency, alongside its potential running costs, allowing renters o make a far more informed decision about each tenancy they enter. Additionally, landlords must provide each of their tenants with a valid EPC for the property they are resident in from the outset of the tenancy period, or within 30 days of an EPC evaluation being conducted. If a landlord neglects to provide this documentation to the tenants then they will be unable to have a section 21 notice, more commonly referred to as a “no fault” eviction, upheld, making reclaiming the property far more difficult should any problems arise.
It is essential for landlords to remember that once a rental opportunity is being advertised a valid EPC should be in place. If the property owner is found to be letting to tenants without a valid EPC in place, the matter will be investigated by the Trading Standards branch of the local council. If trading standards find the landlords to be in violation of the energy efficiency regulations a fine of £200 can be issued for every breach.
If a property fails to reach the minimum energy efficiency standard of an “E” rating and the landlord is found to the letting the property out to tenants regardless the repercussions for the owner can be dire. A local authority is able to serve the landlord with a compliance notice, allowing them to obtain information regarding the rental’s EPC rating, any improvements that have been made to the property in order to increase its energy efficiency, and when the most recent tenancy period took place. If the landlord is found to be in breach of these regulations and is unable to site a valid exemption then they are likely to receive a fine of up to £5,000.
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