How Will Changing EPC Ratings Affect Landlords?

Posted by The Landsite on 22nd March 2023 -

An Energy Performance Certificate (EPC) helps building owners and occupiers understand the energy performance of their property, with the least energy efficient properties receiving the lowest score, G, and the most efficient the highest, A. 

As it stands, current legislation requires landlords to achieve a minimum EPC rating of E, but a new government bill requiring a minimum EPC rating of C is set to change that.

These changes have left many landlords in the dark about the increased requirement of EPC ratings. According to research by Shawbrook Bank, 1 in 7 landlords said they had no knowledge of the forthcoming legislation, leaving millions of properties in a precarious position.

In 2019, the English Housing Survey found that 38% of rented homes had EPC ratings of A, B or C. Significant remedial work to the UK housing stock not at this level could prove to be costly, with some estimates claiming the cost to improve energy performance could be as much as £10,000 per property.

This could prove to be even more cost-prohibitive for landlords with older housing stock. In cases where substantial remedial work is needed, landlords are now in a race against time to secure the finances they need to avoid unrentable or unsellable properties. To further compound the issue, the penalty for failing to meet EPC requirements will rise from £5,000 to £30,000 by 2025.

What are the Proposed EPC Rating Changes?

At present, newly rented properties must have an EPC rating of E or above. However, from 2025, all newly rented properties will require an EPC rating of C or above. Owners of existing rented properties will have until 2028 to ensure the new regulations are adhered to.

For landlords of commercial buildings, the time frame and benchmarks are a little more lenient. From April 2023, new and existing commercial properties must achieve an EPC rating of E or above. According to the proposed changes, by 2027 that must rise to a C, before a minimum threshold of B by 2030. This will give commercial landlords ample time to gradually make changes to the energy performance of their commercial properties.

It is unlikely that the change will impact the vast majority of new builds, which are typically at the top end of the EPC ratings. To put that into context, findings issued by the Department for Levelling Up, Housing & Communities stated that between October and December 2021, at least 84% of new builds were awarded an EPC rating of A or B. 

However, for owners of housing stock built before 1940, things look perilous. Shawbrook Bank’s research found that more than a third (36%) of landlords said their property was pre-1940. Older housing stock such as this is likely to require more demanding work to boost the EPC rating to an acceptable level.

Looking for EPC specialists for commercial property? 

NRG Focus are specialists in commercial EPC Certificates and TM44 Inspections, providing services throughout the UK.

Find more EPC services on The Landsite 

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