What is an Energy Performance Certificate (EPC)?
Energy Performance Certificates were introduced in England and Wales in 2007 and are a legal requirement for buildings to be sold, built or rented out. The EPC contains various information about a property’s energy use, typical energy costs, CO2 emissions, and recommendations on how to reduce energy consumption. An EPC gives a property an energy efficiency rating from A, being the most efficient, to G being the least efficient.
Why are they important?
EPCs are extremely useful to prospective purchasers and tenants of domestic properties. They give an indication of how costly running the building will be, as well as the environmental impact through CO2 Emissions. Individuals should therefore be mindful of the likely cost of higher monthly bills, or the cost of improving the energy efficiency of lower rated properties.
What’s changing?
Since April 2018, landlords cannot grant a new tenancy if the property (both domestic and non-domestic) has an energy rating of F or G. Although this is not new information, there will be a further change in April 2020 that will affect existing tenancies.
From this date it will be unlawful for a landlord to rent out a property which does not have a rating of E or higher, even if there has been no change in tenancy. Breach of these regulations could see landlords slapped with hefty fines. Landlords of residential properties can expect to pay;
- £4,000 for failing to meet the required standards,
- £1,000 if they provide false information to the exemptions register, and
- £2,000 for failing to comply with a notice from the Local Authority.
Penalties for commercial properties vary and may be based on the rateable value of the property subject to a maximum cap of £150,000.
What other effect will there be?
In addition to fines for landlords, those who are intending to purchase a residential property under a buy-to-let scheme should be mindful of EPC ratings. It may be more difficult to obtain mortgage financing if the property has a low rating and once bought, purchasers will not be able to rent the property out until it complies with the regulations. This may cost Landlords thousands to install corrective measures, such as double glazed windows and insulation.
There is a cap and landlords would not be expected to pay out more than £3,500 to make the property compliant, after this an application can be made to be exempt. Nonetheless this is no small sum to pay.
Are there likely to be any further changes?
Looking to the future the government’s Clean Growth Strategy announced a new target to get all housing to an EPC rating of Band C by 2030. Whether this is achievable is uncertain but it does indicate that further changes to Energy Performance regulation can be expected over the next few years.
For further advice on energy performance ratings, please contact us on 01206 700113 or email [email protected] and we would be happy to assist.