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Tue 29 October 2024
Alongside their proposals under the Renters’ Rights Bill, the Labour Government has also revealed plans to improve energy efficiency in rented properties in the UK by 2030. This comes after the Conservative Party’s plans to increase the minimum EPC rating to a C by December 2025 were scrapped prior to the election.
What is an EPC?
An Energy Performance Certificate (EPC) is a home energy report which shows how energy efficient a property is. The reports, which are produced by qualified Domestic Energy Assessors, shows an energy rating on a scale between A and G, with A being the most energy efficient and G being the least. The rating depends on many factors including the age and construction of the building, type of windows, how well insulated the property is and the services it benefits from (form of heating, such as gas or oil, lighting and hot water). An EPC is valid for 10 years and will give an indication to the homeowner and/or tenant as to the potential running cost of the property.
Under the current Minimum Energy Efficiency Standards (MEES) Regulations, which came into force in 2018, properties that are currently let require an EPC with a minimum rating of an E. This legislation requires landlords to spend up to £3,500 making energy improvements to their rental properties which may include upgrading the central heating system, increasing loft insulation or replacing windows.
There are exemptions which a landlord can apply for, if they meet certain criteria, including:
• “High Cost” Exemption
Where there are no improvements that can be made for under £3,500.
• “All Improvements Made” Exemption
Where all improvements have been made within the spend cap and the EPC rating remain below an E.
• “Wall Insulation” Exemption
Where wall insulation has been recommended on the EPC, but may not be suitable for the property.
• “Consent” Exemption
Where consent for energy improvements has been withheld by third parties such as mortgage lenders, freeholders, local authorities (where planning or listed building consent is required) or, in some circumstances, tenants.
• “Devaluation” Exemption
An RICS Surveyor has advised that a certain energy improvement measure should not be carried out as it will devalue the property by more than 5%.
• “New Landlord” Exemption
A 6 month exemption for accidental landlords for whom it would be unreasonable for to comply with the legislation immediately.
What is proposed?
The Labour Government will shortly be consulting on ways to improve the energy efficiency of rental properties in private rented sector and social housing sector with key points to include:
1) Reconditioning the Energy Performance Certificate (EPC) and Minimum Energy Efficiency Standards (MEES) systems. The aim is to make EPCs more accurate and easier to understand and overhaul the current MEES regulations.
2) Raising standards. To mandate that all rented homes in the private-rented sector (PRS) and social sector have an EPC rating of C or above by 2030.
3) Investing £6.6 million to upgrade 5 million homes to cut bills. By working with banks and building societies to provide finance for home improvements. The new “The Warm Homes Plan”, which was released in September 2024, will offer low-interest loans and grants for insulation, solar panels and low carbon heating to low-income tenants and homeowners in eligible postcodes.
Be prepared
Landlords should look to review their current EPC certificates and plan ahead in making improvements to their rental properties, particularly if they are expecting a tenancy to come to an end and/or there are already works planned.
RH & RW Clutton is committed to helping Landlords meet their obligations in complying with an ever-growing list of legislation. We’d like to do what we can to support you as you prepare for these likely changes in regulations from arranging an energy assessment, identifying and obtaining prices for relevant improvements to overseeing contractors undertaking the works.
Contact Sam Benson MARLA in our Lettings Department to discuss your requirements.
This article is intended as a guide only and does not constitute legal advice. Find out more about Labour's plans to improve the energy efficiency of the private-rented sector.
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