Author : Mary-Anne Bowring
landlords will face an extended period of uncertainty as changes are announced to EPC rules
UK landlords are currently facing a period of uncertainty regarding new energy efficiency rules for the private rental sector. The government is still proposing to raise the minimum Energy Performance Certificate (EPC) rating to a band C by 2025 for new residential tenancies. By 2028 all tenancies will come under this rating, including existing ones. However, many commercial landlords are unaware of these new standards that will be implemented from April 2023. Failure to comply with the regulations could lead to substantial fines.
The current minimum legal EPC requirement for residential buy to let properties is E and above. If your rental property has an EPC of F or G without a valid exemption, it will not meet the minimum EPC standard required currently and as the Landlord you would be required to make green improvements to the property.
2 And, what are the 2023 EPC Regulations for Commercial properties? For commercial property The Minimum Energy Efficiency Standards (MEES) regulations have changed with effect from 1 April 2023, such that the current prohibition on new lettings of sub-standard, non-domestic properties now extends to the continuation of any existing lease of a sub-standard, non-domestic property
To comply with the upcoming rules, landlords can carry out various measures such as improving insulation, upgrading heating systems, and installing energy-efficient lighting, introducing smart meters and more. It is crucial for landlords to ensure that their properties meet the minimum EPC rating of Band C or higher to continue renting them out.
Non-compliance with the regulations may result in fines and other penalties. Some landlords may even be eligible to apply for free home upgrades through the ECO4 Scheme, which can help them meet the energy efficiency requirements. However, there is a perceptible delay in the update to New Energy Performance Certificate deadlines. The National Residential Landlords Association (NRLA) expressed frustration at the lack of progress since the consultation on implementing new minimum EPC ratings over two years ago.
The Energy Company Obligation (ECO4) is a government energy-efficiency scheme in Great Britain, designed to tackle fuel poverty and help reduce carbon emissions. ECO is an obligation placed on energy companies to deliver energy efficiency measures to domestic premises. ECO is not a grant scheme; it is up to the energy companies to determine which retrofit projects they choose to fund, the level of funding they provide, and the Retrofit Coordinator and installers that they choose to work with. ECO4 measures were able to be delivered from the 1 April 2022. The ECO4 scheme will run until 31 March 2026.
ECO4 focuses on improving the least energy-efficient homes and households in fuel poverty, as only properties in bands D-G can be treated. It also aims to deliver a more complete upgrade of those homes, shifting to a multi-measure whole-house retrofit approach. Furthermore, a minimum number of private tenure homes in energy efficiency rating bands E, F, and G must be upgraded throughout ECO4, ensuring the least efficient homes are treated.
There is a new Minimum Requirement (MR) to improve the energy efficiency rating of band D and E homes to at least a band C and band F and G homes to at least a band D. ECO4 aims to encourage the installation of various energy efficient measures such as insulation measures, first time central heating, renewable heating, and district heating connections. England and Wales, the Simple Energy Advice website offers impartial energy efficiency advice. If you live in Scotland, contact the Home Energy Scotland (HES) helpline on 0808 808 2282 or visit the Energy Saving Trust website.
The government aims to enforce a minimum EPC rating of C for privately rented homes by 2025 for new tenancies and by 2028 for existing ones. However, landlords are concerned about the uncertainty and tight timelines associated with these requirements. They fear that a cap of 10,000 per property on improvement works might lead to substantial costs for landlords with properties that need extensive renovations. NRLA CEO Ben Beadle highlighted these concerns during the meeting and emphasised that landlords are not wealthy individuals, contrary to popular opinion. Nearly 70 per cent of landlords are basic rate taxpayers.
He explained that the value of 10,000 (in terms of how far it stretches to deliver energy efficiency improvements to a home) varies significantly depending on the location of a landlord's properties. An arbitrary 10;000 also hurts a landlord's cash flow disproportionately depending on where his properties are. For example, in central London, where rental prices are high, 10,000 is still substantial. However, it represents an enormous expense in areas like the North East with lower property values and rents and can easily be more than a whole years rent - and at a time when interest rates are high and mortgage interest relief on rental properties held outside a company has gone.
To address this issue, the NRLA proposed a tapering cap on costs based on property values to support landlords in areas with lower property values. Beadle said Ministers appeared receptive to this idea and confirmed that various government departments are working together to find a way forward. The NRLA has been advocating for a clear and realistic timetable for implementing energy efficiency improvements and a cap on costs that considers regional property values. They hope for a quick resolution as delays have caused uncertainty and impacted landlords.
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