As the impact of climate change is more widely reported than ever, the global shift towards more sustainable practices is set to dominate every sector over the next few decades.
As one of the largest emitters of carbon dioxide (Co2), the property industry is under pressure to lead change. It is the responsibility of developers, constructors, and investors to take a leading role in implementing better practices to reduce environmental harm.
While ‘energy efficiency’ was once a term that property investors could turn a blind eye to, as the UK moves towards a target of being carbon neutral by 2050, landlords are met with tighter energy performance regulations. Also a top priority of eco-conscious renters looking to keep their energy bills down and move towards a greener way of living, investors have no choice but to prioritise the energy performance of their property too.
The UK government recently announced proposals to update the required Energy Performance Certificate (EPC) of all rental properties with the aim of reducing energy waste and in turn, carbon footprint.
This guide will provide an overview of everything you need to know as an investor or landlord on the EPC regulations set out by the UK government.
What are EPC ratings?
An Energy Performance Certificate (EPC) is a document that assesses how energy efficient a building is. Many investors still ask – is an EPC a legal requirement? The answer is yes.
The EPC certificate must be issued by an accredited assessor who will inspect the property and take into account all installed features, such as insulation or double glazing.
The assessor will then assign an EPC rating ranging from A (most efficient) to G (least efficient), valid for 10 years. The certificate will also include recommendations to help improve the property’s overall efficiency and reduce energy bills.
This rating provides investors with an indication of the building’s performance and directly correlates with energy bills and running costs. In the UK, it is mandatory to obtain an EPC before selling or renting property so that potential buyers or tenants are aware of the energy efficiency in advance.
Current EPC ratings & requirements
Since 2018, it has been illegal to let a new rental property in England with an EPC rating of ‘F or G’.
As the UK government seeks to make properties more energy efficient and move toward the target of having a carbon neutral economy by 2050, it is being proposed that all rental properties obtain a rating of A, B, or C. By which year depends on the type of property, as detailed in the next section.
Read more here.
New EPC regulations for landlords – 2025 & 2028
So why are EPC regulations changing? It’s estimated that around 25% of all carbon emissions in Britain are produced by the built environment. The current EPC rating requirements (E or above) is no longer sufficient to combat this.
Following a 2020 briefing on current EPC regulations, the government made proposals that will require all rental properties to have an EPC rating of A, B or C.
If these legislations come into effect, it could mean new-build properties must obtain a rating of C or above by 2025; and by 2028 for properties already on the market.
Build-to-rent properties in city centres typically offer higher EPC ratings than renovated developments or Houses of Multiple Occupancy (HMOs). This is because new-build developments are built for purpose and are therefore future-proofed – designed with evolving sustainability measures in mind.
For existing landlords of older properties, new regulations may mean significant investment is required to bring your EPC rating up to standard. Landlords who don’t take action and continue to let a property with a rating of D or below could face fines of up to £30,000 if the proposals are written into legislation.
Whatever your situation or strategy, property investors are being advised to act now to avoid incurring greater costs later down the line. Future investors should ensure they obtain the required EPC rating (A-C) before investing, ensuring the long-term security of their investment.
What sustainability features should I look for in a new property?
As mentioned, build-to-rent developments (particularly those that completed in the last 5 years), are more likely to be compliant with current and proposed EPC regulations, offering investors peace of mind.
For prospective investors, it’s a good idea to look out for key sustainability features to improve the attractiveness of your investment and increase tenant demand among eco-conscious renters.
Key sustainability features include:
- Heat recovery systems
- Solar panels
- Energy-efficient LED lighting
- Leak detection systems
- Rainwater recycling systems
Select Property’s latest Manchester development, One Port Street, has all these features and more, including car parking with electric charging capacity, cycle parking provision, design features and improved insulation, low or zero carbon energy generating technologies, mechanical ventilation to reduce heat demand and provide filtered air to apartments, and recycling systems made easy for residents.
With cutting-edge design features like these, energy efficiency is unlikely to be an issue for your property and you can rest assured that you won’t need to make further investments down the line.
How to improve your current EPC rating
However, for investors with sub-standard EPC ratings, there are now many energy-efficiency improvements that landlords can make to an existing property.
- Double glazing & insulation – Effective window, floor and wall insulation can make a huge difference to energy efficiency as it reduces the need to put the heating on.
- Smart metres – Now a common feature within households across the UK, smart metres allow you to monitor your energy consumption day to day. This awareness allows tenants to be more mindful of the energy they use.
- Solar panels – Although an expensive investment, solar panels can add value to your property thanks to their ability to cut down energy bills and supply power throughout power cuts. It’s worth noting that solar panels can only really be added if you have a house rather than an apartment within a building.
Here is an example of the types of improvement measures you might expect to see on your EPC if you have an older property, with an idea of costs and typical savings per year.
In the far right column, you can see some measures have a ‘Green Deal finance’ tick. As the UK begins to work towards its carbon-neutral target, it is worth looking into the financial support that may be available to you to improve the energy performance of your property.
There is currently a cap on energy improving investments of £3,500, so it is worth enquiring as soon as possible to understand the support you can get. Visit the Government website to get your EPC certificate.
To find out more about EPC regulations and how to ensure your next investment is future-proof, contact us and a property consultant will be in touch.
View Select Property’s latest investments here.