Proposed changes to the EPC regulations for the Private Rented Sector

Wed 19 April 2023

PROPOSED CHANGES TO THE MINIMUM ENERGY EFFICIENCY STANDARDS

Following the Government’s energy performance consultation and as part of their commitment to achieve net zero by 2050, a proposal was made to amend the existing regulations to increase the minimum EPC rating for newly rented homes, or those with renewed tenancies, from an E to a C from 2025 and those with existing tenancies from 2028. Although, it has more recently been reported that there are plans to delay the introduction of the proposed regulations until 2028, which would encompass all let properties, however this is yet to be confirmed. 

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.

The proposed Bill
The Bill currently states that properties which are newly let or relet (including tenancy renewals) from 31st December 2025 must have an energy efficiency rating of C or above. This would apply retrospectively to all existing tenancies from 31st December 2028, “where practical, cost-effective and affordable….”. Landlords would also be required to spend up to £10,000 (incl VAT) making relevant improvements. It is currently unclear whether the existing exemption policies will be revised or added to within the proposed regulations.

Whilst it has been suggested the Government will be delaying the new proposals to 2028 for all let properties, it is hoped that this will also allow consideration to be given in providing landlords financial support, or other incentives, in making the required improvements to their tenanted homes in order to comply.

The suggested changes to the Energy Efficiency (Private Sector) Regulations 2015 are outlined in the Minimum Energy Performance of Buildings (No2) Bill.

Let us help you plan ahead
Whilst the proposed changes and timings are still undecided, the Governments commitments to reduce fuel bills and improve the standards of tenant’s homes alongside their net zero strategy does imply that the proposed changes are a matter of “when” rather than “if”. 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.

Being a landlord, whilst rewarding, presents you with a set of responsibilities which can be very time consuming and difficult to navigate at times. 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 regulations from arranging an energy assessment, identifying and obtaining prices for relevant improvements to overseeing contractors undertaking the works.

Contact Sam Benson at RH & RW Clutton’s Estate Agency & Lettings Office on West Street in East Grinstead to discuss the upcoming legislation and any other letting related matters. 

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