Large portfolio landlords could get a new portfolio-based exemption as part of legislative changes to improve PRS energy ratings.

All tenancies will need to meet an EPC C from 1st October 2030, but the government has outlined new exemptions which could give certain landlords some breathing space.

Although the maximum that landlords would need to spend is £10,000 or 10% of the property value, if their property still doesn’t meet the minimum standard they can register a cost cap exemption which won’t increase annually in line with inflation. However, this is going to be reviewed every five years to account for inflation along with the cost of purchasing and installing measures, but not until after 1st October 2030.

For landlords with larger portfolios, instead of assigning a cost cap to individual properties, the government is considering how they might be able to multiply it by the amount of properties they have (up to a set amount) and then utilise this total across their properties.

Concerns

Acknowledging concerns that some improvement works might not always be suitable, such as for heritage properties, it is including a negative impacts exemption where landlords can evidence that relevant works would negatively impact a property, and a solid wall insulation exemption, if the landlord doesn’t believe this would be right for their property.

The existing high-cost exemption - if the cost of making even the cheapest recommended improvement on the EPC would exceed the cost cap – and third-party consent exemption – if consent from a relevant third-party, such as a tenant, superior landlord, planning authority, isn’t granted – will remain in place.

Cost

Both the cost cap, affordability exemption and the negative impact exemptions will be valid for 10 years while all other exemptions will continue to be valid for five years.

Once the new PRS Database is set up – potentially later this year - and the new rules are in place, local councils would be able to identify which properties in their area are let in the PRS and whether these are compliant. If not, landlords face a fine of up to £30,000 per breach – up from the current £5,000.

However, its impact assessment reckons the cost cap is generous and that the average per property spend will be £5,400.

The government has also opened a fresh consultation into the Home Energy Model – the new methodology for EPC assessments – which runs until 18th March.

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