A Landlord’s Guide to Energy Performance (EPC) Certificates
An EPC certificate and EPC rating are hugely important if you are a landlord. It can vastly affect how much your property is worth, how much it costs to run and how popular it will be when renting it out to tenants.
With the law and government guidelines changing over the past year, all existing and new landlords should be aware of the new rules in place, as well as possible exemptions. Understanding the procedures and current standards needed for your property will mean you can avoid fines and still make a profit on your properties, both domestic and commercial. Read on to see an energy performance certificate explained.
What Is an EPC Rating?
Every property throughout the UK, both commercial and domestic, receives an EPC rating which stands for energy performance certificate. This rating tells you how energy efficient the property is, how well it conserves its heat and energy and how costly running the property might be.
In the UK, they are carried out by EPC assessors who take many factors into consideration and give you a rating. A is the best, the most energy-efficient and cheapest to run, while and EPC rating F or G is the least effective.
Changes in the Law and EPCs That Landlords Need to Know
In April 2020 the changes around EPCs and what landlords could and couldn’t rent out. As of this date, landlords are legally not allowed to rent out a house that has an energy rating of F or G, which is the lowest rating there is. In 2023, this will also extend to commercial properties as well.
How to Improve Your EPC Rating
There are lots of things you can change about a property to improve your EPC grading. Any of these changes will enable the building to conserve energy and function more effectively:
- Insulate your loft, many different materials are fantastic at insulating heat
- Get a new boiler, many older boilers are not as efficient as newer models
- Install double glazing, a great fix to reduce noise pollution and keep the heat in
Exemptions to Improving Your Rating
In some circumstances, landlords can be exempt, or temporarily exempt, from changing their property and improving energy efficiency. An EPC assessor can find the following exemptions:
- If a landlord has undertaken the appropriate measures to improve their energy efficiency rating and the costs have come to £3,500 including VAT and the property is still rated E, you can register for an exemption. This cap can make you exempt from making any changes for the next 5 years, then the property needs to be upgraded again.
- Work cannot compromise historic buildings and alter how they look, especially listed buildings
- The work can not decrease the value of your property by 5% or more
- If mortgage lenders don’t approve the changes
What Is a Good EPC Rating?
The closer your rating is to A, the more cost-effective and energy-efficient your property is. For example, from January to March in 2020, an impressive 82% of new properties built during this period had a rating of A or B, which shows what older properties are now contending with.
The Estimated Cost of Improvements
This depends entirely on your current rating, how old your property is and many other factors. If your property is rated E for example, this means you are going to have to invest a lot more into it, to improve the EPC rating and get it up-to-scratch. If your property does have a very low score though, the cost is capped at £3,500 and after 5 years you will have to invest the money again and make these changes.
On the other hand, these types of improvements could be much more affordable. For example, insulating your home in the UK could cost anywhere between £400 to £800, or to install double-glazing, the price could range from £150 to £600.
While these improvements might seem costly to begin with, it is worth keeping in mind that these will make your property cheaper to run and will increase the overall value of the property if you go on to put it on the market in the future.
Tenants Rights Concerning EPC Certificates
Whether you own properties or have tenets currently renting from you, it is worth knowing that in many cases tenants do have the right to make energy improvements to the house. It is worth noting that the landlord doesn’t have to contribute to these costs unless they want to contribute.
From April 2016, tenants are legally allowed to ask their landlords to look at improving the energy efficiency rating of their home. Although the cost of this does lie with the tenant, the landlord can only refuse if the request is seen as unreasonable.
Using the New Digital EPC Portal
In September 2020, the four previous EPC portals were consolidated into one portal, making accessing your EPC rating and getting up-to-date information and your properties easy. This portal and EPC register is the place to go if you are looking to improve your property’s EPC, or you are wondering where to start.
Here are some of the useful new features:
- You will receive a URL rather than a PDF, making the information more up-to-date
- Includes an overview report that can be viewed before lodgement
- Easier to use, all the important overview information is on the front page
Although an EPC lasts for 10 years, any newly rented or sold properties, either domestic or commercial, need to comply with these new changes. As a landlord, it is worth brushing up on the new changes in the law and guidelines, so you can make the most of your investments.
Staying ahead of the curve will mean you can maximise your investments and the properties that you currently have while making all the improvements and changes that you do. Improving your EPC rating and updating your EPC certificate can be easier than you think, so it’s worth investing the time and effort into figuring out the right improvements for you to make.