Increase in time to upgrade your property to EPC Band C?
According to reports, the government is considering postponing its intentions to raise the Minimum Energy Efficiency Standards for privately rented properties to EPC Band C.
According to reports, the government is considering postponing its intentions to raise the Minimum Energy Efficiency Standards for privately rented properties to EPC Band C.
In March, reports emerged about the government planning to extend the deadline for increasing EPC ratings to Band C for rental properties, setting a new deadline of 2028. This extension would grant landlords an additional three years to meet the updated energy efficiency requirements.
Recently, Housing Secretary Michael Gove stated in an interview that the government may have been overly demanding of landlords and should "relax the pace" of the proposals. He acknowledged the significant capital expenditure landlords are facing to enhance property efficiency as the reason for this suggestion.
What are the proposed changes for EPC rating requirements?
The main proposal by the government is to elevate the minimum energy efficiency standards for privately rented homes in England and Wales to EPC band C. This would lead to improved energy performance in rental properties.
The EPC bands range from A to B, with A being the most energy-efficient. Presently, the minimum energy efficiency rating for privately rented properties stands at EPC band E.
As of now, there are approximately 3.2 million private rental sector (PRS) properties in England and Wales with an EPC rating of D or below.
When are the new standards expected to take effect?
Initially, the government proposed a phased introduction of the new standards, intending them to apply to new tenancies from 1 April 2025 and all tenancies by 1 April 2028.
However, recent reports indicate that these proposals might be delayed. The new suggestion is to grant landlords an extra three years to prepare, setting a new deadline of 1 April 2028 for all rental properties to comply.
The aim behind this potential extension is to minimise disruption for landlords and tenants, provide additional time for landlords to plan and save for necessary improvements, and foster a comprehensive "whole house" approach to enhancements.
What will be the updated investment cap?
Currently, landlords of properties in EPC Band F or G must personally finance energy efficiency enhancements, as recommended on the EPC, with a maximum cap of £3,500.
Considering that achieving EPC Band C will necessitate more substantial investments, the government plans to raise the cap to £10,000. According to government modelling, the average expenditure for most landlords to upgrade their properties to EPC Band C would be around £4,700.
What does a "fabric first" approach mean?
A "fabric first" approach to energy efficiency prioritises enhancing the building's fabric efficiency, such as improving insulation, before focusing on heat and electricity generation improvements.
Cost-effectiveness is a key consideration in the fabric first approach, and it also informs the recommendations listed on an Energy Performance Certificate (EPC). The improvements are typically listed in the following order:
- Insulation
- Heating and hot water systems
- Upgrading windows and doors
- Electricity generation measures
In practice, landlords have the flexibility to make the recommended improvements in any sequence, as long as they adhere to the EPC recommendations.
The government is exploring ways to incentivise landlords to adopt the fabric first approach, including the possibility of making it a regulatory requirement.
When was the consultation on the proposals concluded?
The consultation on the proposals to elevate minimum energy efficiency standards concluded on 8th January 2021. These proposals are anticipated to be incorporated into the Minimum Energy Performance of Buildings bill, which is currently awaiting its second reading in the House of Lords.
As part of the consultation process, the government has devised an action plan to enhance the utilisation and effectiveness of Energy Performance Certificates (EPCs). This plan involves updating the Energy Performance of Buildings (England and Wales) Regulations 2012 (EPB Regulations) in the year 2022.
What were the key components of the EPC plan of action?
The EPC plan of action encompassed a comprehensive list of 35 actions, with three top priorities:
- Ensuring the production of accurate, reliable, and trusted EPCs, is crucial for setting up incentives and supporting financial implications related to improving energy efficiency in homes
- Engaging consumers and devising policies to encourage homes to transition to the proposed EPC Band C
- Implementing data infrastructure improvements to enable the effective use of EPCs in decision-making processes for enhancing energy efficiency in homes
As part of this action plan, a second consultation is being prepared to advance essential regulatory actions, including amendments to the Energy Performance of Buildings (England and Wales) Regulations in 2022. The forthcoming consultation will cover topics such as:
- Utilising and accessing data to enhance EPC audits
- Considering revisions to penalty rates and ensuring compliance and enforcement
- Enhancing oversight and accountability throughout the EPC system
What is the energy efficiency status of private rented properties?
According to the consultation document, the UK's housing stock is generally older compared to the rest of Europe, and there is substantial room for improvement in energy performance.
Among the housing stock, privately rented properties, comprising 20% of the total, are among the least energy-efficient. In 2018, these properties incurred energy bills exceeding £6 billion and contributed approximately 11 megatonnes of carbon dioxide equivalent in greenhouse gas emissions annually.
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