Helping Your Landlords Navigate the Changes to Energy Performance Certificates

In the coming months and years, letting agents will need to be fully up to date with the changes to the Energy Performance Certificate (EPC) regulations in order to help their landlords. The government wants to make rental properties more energy-efficient and these changes could impact house prices and rental values across the whole of the United Kingdom.

The Bigger Picture of EPC Changes

The UK government wants all rental properties to achieve an EPC rating of C by 2030. This target is part of a national strategy to try and deal with climate change and reduce carbon emissions. Currently, over half of private rental properties are rated at below C and most landlords only want to spend around £2,400 on improvements which is far less than the estimated £15,000 per property that may be actually needed to comply with the regulations. This funding gap could create a significant challenge for the rental market and it could create extra pressure on house prices and house values by postcode.

Understanding the EPC Landscape

The journey towards these new EPC standards has been quite complicated. Since 2008, landlords have needed to have an Energy Performance Certificate when selling or letting a property. The Minimum Energy Efficiency Standard introduced in 2018 wanted rental properties to achieve at least an 'E' rating. Now, the government is raising the bar to a 'C' rating by 2030. The Labour government has suggested that there will be potential grants on offer that range from £15,000 to £30,000 to help landlords make all the necessary improvements. However, these grants could come with conditions such as landlords having to potentially cover half the upgrade costs for properties, especially if they have more than one rental property.

Why Are These Changes Happening?

The goal of these changes goes beyond merely mproving individual properties. The government wants to reduce carbon emissions, fight fuel poverty and create more sustainable housing. By 2050, the UK is aiming to reach net zero carbon emissions and trying to improve the energy efficiency of homes, including rental properties, is a big step towards this target.

What This Means for Landlords

Many landlords will be faced with a big challenge to get their properties up to standard. Those with older properties or less energy-efficient homes will need to invest a lot of money to make the improvements, and the potential consequences are serious - failing to meet the new standards could result in fines up to £30,000 or being banned from renting out the property.

How Letting Agents Can Help

As a letting agent, your role is important because you will need to help landlords through these changes. The best approach for this combines assessment, gradual improvements and forward-thinking planning.

The first step your landlords need to take is to have a full EPC assessment. This 30-40 minute evaluation will give them the exact details about the current energy performance of their property. It will also highlight specific areas for improvement and help to create an upgrade plan. The certificate looks at different parts of the property, such as:

How good the insulation is
How the heating system works
How well the windows keep heat in
The type of lighting used

Each property gets a rating from A to G. A is the best which means that the property is very energy-efficient. G is the worst and this means that the property wastes a lot of energy.

How the Ratings Work

EPC A (92points): The highest level of energy efficiency 
EPC B (81󈟇points): Very good energy use 
EPC C (69󈞼points): Good energy performance 
EPC D (55󈞰points): Average energy efficiency 
EPC E (39󈞢points): Below average performance 
EPC F (21󈞒points): Poor energy use 
EPC G (1󈞀points): Very poor energy efficiency

The certificate does more than just give a rating. It also suggests ways to improve the energy efficiency of a property. It also tells you what improvements you could make, how much they might cost and how much money you could save on energy bills.

Focus on Cost-Effective Improvements

Not all of the EPC upgrades will be expensive. Simple changes can make a big difference to the energy rating. For example, adding roof insulation can improve the rating by 10-15 points and cavity wall insulation might increase the score by 5-10 points. Even small changes like adding hot water cylinder insulation or switching to LED lighting can boost your EPC ratings.

Consider Renewable Energy Options

Renewable energy can be a game-changer for EPC ratings. A solar panel system can increase the score by around 10 points. While these upgrades do require a bigger initial investment, they can prepare the property for future energy changes and significantly improve its energy efficiency.

Impact on House Values

Energy-efficient properties are becoming more popular amongst buyers and renters. They will often be able to achieve higher rental rates and can potentially increase house values by postcode. Generally speaking, properties with better energy ratings are likely to be more valuable.

Practical Advice for Landlords

The current proposal from the government has suggested that new tenancies must meet the EPC rating of C from 2028 with all tenancies needing to comply by 2030. However, there is still uncertainty about the exact implementation of this. Recommend to your landlords that they start with a thorough EPC assessment, carry out low-cost improvements first, research available grants and funding, create a long-term upgrade plan and keep on monitoring property values and market changes. While the initial investment might seem daunting, energy-efficient improvements can offer long-term benefits. Lower energy bills, potentially higher property values and reduced environmental impact are key advantages. However, landlords need to carefully balance the costs with potential returns.

Supporting Your Clients

As a letting agent, your role is to provide clear guidance. Help landlords understand and embrace the new regulations by identifying cost-effective improvements, accessing available funding, planning long-term property upgrades and protecting their property investment. The EPC changes present both challenges and opportunities. By offering well-researched and practical advice, you can help landlords navigate these new regulations effectively. The key is to approach these changes methodically and to focus on improvements that add real value to both the property and potential tenants.

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