It was always planned that a rise in the minimum energy efficiency standard was on the cards. The indications were that the minimum E EPC rating would be replaced with a D rating in 2025 and to a C rating from 2030. A new consultation proposes a new, accelerated timetable.
The Proposals
Making improvements to the energy efficiency of rented properties is not only beneficial to the tenant but is also good for the planet, our children
and generations beyond. In addition the Government has legislated to
bring all greenhouse gas emissions to net zero by 2050.
Following a Call for Evidence in 2018 the Government has launched a new consultation to run until 30 December proposing, in a surprise move, that the increase to band D is skipped and that rented properties should achieve a C rating for new tenancies by 2025 with a three year transition period for existing tenancies.
Other than the benefits listed earlier, the one step process would be less
disruptive and would cost landlords less in total, however, there is an
obvious issue of affordability.
So what’s it going to cost?
The landlord of an F or G rated property currently has to pay up to the
current cost cap of £3,500 including VAT per property on improvements
from the list on the EPC. If having spent that amount the property is still
below an E rating then an exemption can be registered.
The proposal is to raise that cost cap to £10,000 per property. This brings
into scope the more expensive improvements such as solar;
condensing boiler and even heat pumps. It appears that many, if not
most, landlords will have to make improvements.
Some of the housing stock is likely to be incapable of ever achieving a C
rating and will require what improvements can be made to be
made. Bear in mind too that anecdotally, some newly built
properties do not achieve a C rating.
Fabric First
The consultation sensibly proposes that heat loss reduction is the first
priority and can most easily be achieved through insulation, which is
the most effective improvement, as well draught proofing, and efficient
doors and windows. These improvements are the least expensive
to install.
Ground source heat pumps and other energy generation measures may
currently stretch even the £10,000 proposed cap, but in the case of a new
build property with a D rating they may be the only improvements
available. Government estimates that the average property would cost a
landlord around £4,700 to achieve a C rating.
Green Homes Grant
Whether this proposal moves forward or not, the direction of travel is clear.
The Government has announced a Green Homes Grant scheme open
until 31 March 2022, and available to landlords, where they will pay up to
two thirds of the cost of relevant improvements to a maximum of
£5,000. The work must be done before the deadline and by a TrustMark registered installer. If property is going to need money spent to improve the EPC rating this will be a very cost effect way to do it.
Other Proposals
Currently an EPC is only required when a property is marketed for sale
or let. If its 10 year validity expires during the tenancy then a new EPC is
not required until next marketing.
It is proposed that a valid EPC will be required throughout the tenancy, as per the gas safety record. It is also proposed to increase the maximum penalty to £30,000 from the current combined maximum of £5,000 as well as giving tenants the right to request improvements and seek compensation for non-compliance.
Have your say at https://www.gov.uk/government/consultations/improving-the-energy-performance-of-privately-rented-homes
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