Compulsory EPC band “C” by 2025 causing confusion

There have been recent confusing reports put out that from 2025, all newly rented properties in England & Wales will be required to have an EPC rating of band C or above.

This is somewhat misleading and “jumping the gun” as so far this is only a Government proposal following a recent energy performance consultation. But it does form part of the Minimum Energy Performance of Buildings (No. 2) Bill currently wending its way through Parliament.

And, given the Government’s public commitment to net zero by 2050 at the recent international COP 26 hosted in Glasgow last year, it is looking as if the new standards will come in or at least something very close to the proposed changes.

The Bill states:

The Secretary of State must amend the Energy Efficiency (Private Rented 15 Property) (England and Wales) Regulations 2015 (SI 2015/962) to require that, subject to subsection (2)—

(a) all new tenancies must have an energy efficiency performance of at least EPC Band C from 31 December 2025; and

(b) all existing tenancies must be at least EPC Band C from 31 December 20 2028 where practical, cost-effective and affordable as defined under section 1(4).

What are the current regulations?

Currently, any property in England, Scotland or Wales that is either being built, marketed for sale or let as an entire property requires an Energy Performance Certificate (EPC). Since the 1st of October 2008, landlords letting whole properties must have a valid EPC rated at “E” or above to provide to prospective tenants. EPCs are valid for ten years. After this time, landlords are only required to get a new EPC if they are re-letting to a new tenant.

The Government’s proposal in the Bill is that rental properties meet a compulsory energy performance certificate rating of band “C” on new tenancies by December 2025, and on all rented properties by December 2028. Consequently these proposals must be taken seriously, but we’re not there yet.

Small-landlords confused or not yet aware

According to a recent House of Lords report on housing demand, around 45% of landlords own just one rental property, and another 38% own between two and four properties. Given that many of these people don’t follow developments too closely, many will be unaware of these potential changes which will affected them financially.

Some rental properties will require the substantial sums needed to bring them up to EPC band “C” and this is scary territory for many rental property owners, it’s causing a lot of concern.

One recent report by The Daily Mail’s This is Money claims that one-third of landlords were “not confident” they would be able to get their properties up to this standard. Some had said they were unable to afford the required improvements which may include such things as replacing old gas boilers, improving floor, ceiling and wall insulation insulation and installing double glazing in windows and doors.

Others said they did not see how they could do the necessary work with tenants in situ, and that they did not want to face the expense and loss of income by evicting them or finding temporary alternative accommodation. Others said they were unclear as to what they would need to do to bring their properties up to this standard because the Government had not provided enough guidance.

Plan ahead

Although there is still uncertainty as to what the final rules will be, or even if the change will happen, the fact remains that sooner or later the standards will need to be improved.

Landlords might as well “bite the bullet” sooner rather than later and plan to make impoundments when opportunities arise. One such opportunity would be when tenancies come to an end and before a new one begins.

Start off by taking a look at the recommendations in the current EPC document. This should give a guide, though it is perhaps more beneficial to get some builders’ estimates from people who know what they are doing when it comes to energy efficiency improvements.

See: Landlords advised to future-proof properties by aiming higher with EPC standards

The Government and many campaigning groups see improving energy efficiency in British rental homes as a priority and there is no doubt that many of these homes have woeful standards which not only add a lost to the cost of heating, they affect the occupants’ health.

According to the latest figures available from the Department for Business, Energy and Industrial Strategy, UK homes account for 15 per cent of the county’s greenhouse gas emissions, a lot of which is down to poor insulation standards, heat is being paid for and lost unnecessarily.

Is there any financial assistance for property EPC upgrades?

The Government tried in the past to offer support through Green Homes Grant, available to landlords as well as homeowners, but the scheme was quickly abandoned. Given that there is a lot of political pressure to meet green energy targets however, it is possible that some form of financial support may be offered to landlords in the future, but so far there is nothing on the table.

14 COMMENTS

  1. If you are correcting false assumptions about what is currently law you ought to get your own facts right – mandatory EPC E for rentals was not introduced in 2008, EPCs were introduce in 2008. Mandatory E for rentals came much later..

    Advising LLs to ‘bite the bullet’ might also come back to haunt you given that the legislation has not been published; expense incurred early may not count towards the threshold spend & there is a change to the EPC algorithm due in Summer 2020 both which could impact on work a LL may choose to do.

    I don’t think I will be making any ‘impoundments’ and if I was I would not be taking a ‘builder’s’ advice about what improvements to make and the effect on the EPC.

    Overall, Tom, a very sloppy piece.

    • Slightly harsh, in that the article was meant as a reaity check for recent reports about MEES epc standards as you know Tricia, but I understand the sentiment. Could do with dusting off the grammar book a little also Tom.

  2. Couldn’t agree more Tricia. The advice from NRLA is certainly not to make “impoundments” yet especially because they may not count towards the threshold spend which is proposed to be be raised to £10,000.
    Each time the algorithm is changed EPCs spew out all sorts of changes – in my experience by reducing the count – so selling might be better than improving! Further if the green levies are removed what effect will that have on EPCs. Whilst I don’t advocate NRLA’s wait and see approach I certainly wont be going down the road of some “impoundments” such as external wall insulation or digging up concrete floors. I might put up a wind turbine though 🙂

  3. As a newby LL these recent epc reports are alarming. It suggests that for any new LL’s buying further properties need to seriously look at the current and, perhaps more importantly, potential epc rating. As it stands, the options seem to be either exemption, reasonable costs to implement, green schemes for grants or exit.

    There still seems to be quite a lot of variables such as the proposed thresholds, penalty fines for prosecuted LL’s from £5k max to proposed £30k, double ouch etc but it seems almost inevitable some of this will stick.

  4. I’ve read the Minimum Energy Performance of Buildings (No. 2) Bill as fed by the above link and currently in it’s second reading. Other than for Domestic Premises 1.(2)(c), £20,000, I cannot see any proposed ‘threshold’ figure for Privately Rented Properties (currently £3,500 I believe).
    Sandra above states this to be £10,000 (I assume that’s for PRP) but can Sandra or anyone direct me to the clause in the Bill please? At any rate where is this info coming from?
    I only see 2.(2): “A landlord is exempt from the duty in subsection (1) to bring a property up to EPC Band C if they meet the criteria for an affordability exemption, as may be specified in regulations made by the Secretary of State”.
    Thanks

  5. The assertion that there is no help for landlords now thst the green ho es grant is gone is incorrect, you can get eco grants based on your tenants status, if your tenant receives certain benefits or has a low income then the landlord can qualify for a fully funded eco grant for internal, external, loft, underfloor or flat roof insulation and also partly funded first time gas central heating if the property currently has no heating or electric heating and has a low epc.

  6. We are in total disbelief that we are in a position where we have no choice but spend money with little chances of a return on our investment.
    There’s going to be an awful lot of band d and below ex rental property coming to the market

  7. Why don’t you do a sensible article and find out exactly what is needed for band C EPC? Our tenant is very happy with things as they are. He says the house is warm and comfortable and cannot understand why we have to spend unnceccesary money on EPC improvements. He is wise enough to know that rents will have to be raised and despite trailing the internet through no advice given, we in Wales, on the whole have old property with stone walls and looked after properly does not create any problems. Equal respect from our tenant and ourselves complete the picture. What right have politicians who know nothing to interfere? We have more than enough with Julie James’ draconian new bill without loosing sleep over the EPC as well. Carry on like this and there will be no rental properties on the market in Wales;

  8. Does anybody know if the supposed new EPC grade C and above applies to all rental or only those rental properties who have an outstanding mortgage?

  9. If an EPC with say a ‘D’ rating expires before 31 December 2025 (assuming proposals go ahead) and the same tenant remains in occupation as at 31 December 2025 and 31st December 2028, am I correct in thinking you would not need a new EPC? You will only need a minimum of ‘C’ rating where an EPC exists? Obviously, would then need one with a minimum ‘C’ rating if the property becomes vacant and is remarketed.

  10. Unfortunately we are now living in a increasingly quasi-fascist culture. Especially when in comes to Central or local government enforcing its agenda or tax grab. Our property was recently (quite out of the blue to us) classified as something called an ‘additional HMO’. This means it’s not an HMO but now has to be treated as one. The licence fee per room was £520 (we have four rooms) – I believe an actual HMO licence has a significantly cheaper per room price! – it’s a simple tax grab on landlords. This re-classification was dropped on landlords in the area with smug legal statements that unless the licence was obtain we would suffer (£30,000 or unlimited fines or the property being taken over by the court) and that no landlord would be legally allowed to end a tenancy agreement until the Licence was obtained. There are also rules that tenants can recover rent for periods when the property isn’t correctly licenced!! We had to take out five lovely Victorian doors, install hard wired fire alarms, emergency lights, submit plans, ect. All very expensive and all with our hands tied, so that if we chose, as British citizens to not become ‘HMO’ landlords and sought instead to end the tenancy and use the property for something else we could have potentially come into legal difficulties. Expect no less with these changes !!

  11. As regards the Epc, it would make more sense to get an Epc assessor to discuss the best way to get the property to a C. I find sometimes that although with the best intentions builders / electricians / heating engineers advise people to make changes without understanding what that advise will mean to the Epc rating. There is lots of marketing blurb on the net for instance about electrical heating appliances being ‘100% efficient’ however when the Epc is done these devices / systems often score very badly.

  12. We have repeatedly (including last evening, 06/07/22) contacted our EPC assessor who adamantly refuses to discuss any assessment requirement saying that the compulsory C rating does not exist at the moment, and he understands the system is due for a major overhaul. He then ends the telephone call.
    All very well to say, plan for the future. What future will we have if our income is raided?

  13. Does anyone know a solution to borrowing quickly at low value to fund upgrades, seems to be little flexibility on early repayments for most personal loans and bridging providers seem to have quite a high minimum borrowing that I don’t need!!

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