Anyone remember HIPs, those lovely Home Information Packs decried by many as nothing more than expensive and unnecessary red tape? Well when, then Communities Secretary, Eric Pickles laid an order before parliament in 2010 suspending HIPs, he left behind the EPC, an effort to raise environmental standards of everyday buildings, but also a potential financial ticking time-bomb for some landlords.
It is fair to say that confusion abounds amongst landlords regarding the new EPC regulations that came in this year in April. There has been very little direct information provided to landlords by the government, in effect leaving it to market forces to take care of communicating their bad news. Furthermore, there is concern over the government’s lack of foresight with these new changes. The reality is that while some properties will be able to bring themselves up to an acceptable grade with a few small tweaks, others, especially those older properties that one might find walking along a normal street, could need much more substantial and costly work. The question that comes to mind here is who is ultimately going to bear the cost, the landlord or the tenant via increased rents, and does this then defeat the purpose of other initiatives to keep rent and affordability levels in check.
So what exactly is an EPC?
For those who do not hold the grand title of Energy Assessor, let’s get back to the basics.
An Energy Performance Certificate, or EPC as it is commonly known, is a document required by law when renting or selling a property. It outlines the property's current energy efficiency and provides information on how to improve energy efficiency and reduce carbon dioxide emissions.
The EPC grades go from A, the type of house that your everyday eco-warrior might call home (i.e. very energy efficient) all the way down to G, a drafty and cave-like dwelling (slight exaggeration but in effect not very energy efficient). The higher the rating, the less impact the property has on the environment and the lower the expected fuel bills will be.
The average grade for a UK home is ‘D’. You may not think this sounds great, but an extreme ‘A’ grader (generally your Green Peace activists with dedicated berths on the Rainbow Warrior) can get away with only spending £15 and change for a year's supply of energy for heating, lighting, cooking and hot water!
Landlords need an EPC if renting out individual self contained flats and houses (i.e. property with its own front door, kitchen/bathroom facilities), shared flats or houses, and mixed self contained and non self contained accommodation. Now there is some confusion on this matter, but to the best of our knowledge a landlord will not require and EPC for bedsits or room lets where there is a shared kitchen, toilet and/or bathroom, and rooms in a hall of residence or hostel.
What changed in April 2018?
The government’s new regulations in England and Wales (Scotland currently has a similar legislation that is already in place) mean that properties being let out from April 2018 were required to have a minimum grade of ‘E’ which may result in the need for some costly refurbishments. Part of the reason for this is the the age of some houses in the UK – they are simply too old to have much capacity to be energy efficient. This means that people owning older properties face significant challenges with making their house more energy efficient, a fact the government seemingly fails to acknowledge.
Some helpful news though, if you can call it that, is that landlords will not automatically be required to bring their properties into line with the legislation if they already had tenancy in place come April 2018. There is also the possibility of qualifying for an exemption or temporary exemptions, such as for periodic tenancies (where the fixed term contract has ended but the tenant has remained in situ). From April 2020 though, nearly landlords will be prohibited from continuing to let their properties under existing tenancies if the property is rated below an ‘E’ (with stricter regulations proposed for 2025 and 2030). The only continued exemption relates to listed buildings. The relevant legislation provides the impression that listed buildings are automatically exempt, but beware, the exact position is much more complicated and requires a building by building assessment against a backdrop of inconsistent guidance.
The upshot of this new regulation is that if a local authority considers a landlord to be in breach of the regulations, it may impose a fixed financial penalty, with the maximum penalty for non-compliance in residential properties being £5,000.
What you can do to improve your grade
If you’re worried about your property not being up to standard for the new EPC regulations, there are measures you can take to improve your home’s energy efficiency.
Double-glazing, cylinder insulation, roof insulation, better heating controls and a more efficient central heating system will all contribute to helping create a better EPC rating. It is also important to know whether or not your property has solid or cavity walls. If the property was built after 1920 it’s likely to have cavity walls, before or around 1920 and it’s likely to have solid walls. Cavity walls are able to be filled with insulation as they have a double external wall with a small gap where insulation can be filled.
Taking the time to make a full assessment on all your properties as soon as possible is crucial to avoid falling foul of the laws, and of course incurring those hefty fines.