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Every rental property is required to have an Energy Performance Certificate (EPC Certificates) that has a minimum “E” rating. But that is set to change as new rules come into effect that requires rental properties to bring their rating up to a “C” by the end of 2025. What that means is that some landlords could face big bills for improving the insulating properties of their buy-to-lets, including loft insulation, walls, windows, and doors, and even the replacement of older, less efficient white goods.
As you can see from this image of EPC Certificates, moving from an “E” rating to a “C” rating could be challenging for older properties that are not well insulated. And for accidental landlords, people with property investments who are reaching retirement age, and small landlords, this news is not ideal.
It’s not new news, however.
New Landlord Rules for the Private Buy-to-Let Sector including Energy Performance Certificates
In March this year, we reported on forthcoming changes to regulations for buy-to-let landlords. There were a number of changes expected including Capital Gains Tax, Making Tax Digital for VAT, and the Renters’ Reform Bill. And of course, the expected announcement this year of changes to EPC Certificates.
You can read our earlier blog here
Energy Performance Certificates aren’t all bad news either
Some landlords will simply not be prepared to take on the additional investment to bring their property portfolio up to standard. And those landlords are likely to put their properties on the market for a quick sale. They will look at what the value of their properties is, and could decide that they’re happy with what they’ve got, rather than spending money to stand still.
So the opportunity is there for property investors who are looking for property to add to their portfolios. Properties are currently completing sales in around 150 days, which is quick, so those landlords looking to sell now can do it quickly, while buyers can enjoy the same experience. And for investors, there may be opportunities to take on additional properties at below market value while sellers are looking to secure their equity. So there are deals to be made by savvy investors as properties come onto the market.
For renters, there is also a knock-on effect. The end result of the change to EPC certificates means that over the long term, the quality of the housing stock will increase, and the cost to tenants of running their homes will fall due to improved insulation, replacement of white goods, boilers, and other household equipment with more energy efficient products.
Are there any exceptions to new Energy Performance Certificates?
Yes, there are. Existing tenancies have to meet the new EPC Certificate requirements by 2028 rather than 2025, and listed properties may have some exceptions where improvements could change the fabric of the property. In this case, consulting with local planning officers will be necessary.
And new properties will be built to meet the new EPC requirements in any case.
Can you look at properties on an EPC Register?
Yes, you can. You can look up EPC Certificates for those properties that have to have them. You can access the register here It is possible to opt out of this register, but it’s a useful tool for renters to check out the properties that they are considering letting. So it’s quite simple for potential tenants to look up your EPC certificate online.
Are there any real benefits to Energy Performance Certificates?
There could be some benefits to EPC certificates. Whilst it’s a requirement to upgrade EPC Certificates to a “C” rating, administering and enforcing it could be a different matter. So there could be a minority of landlords who simply ignore their responsibilities. For the majority who do invest in compliance with the new rules, they may be able to command a higher rental yield and promote their properties as “green”, making them highly competitive. In the longer term, the housing stock in the UK will be improved and energy usage reduced, so there is a knock-on benefit for the environment.
It also won’t be in the interest of estate and letting agents and property management agencies to work with landlords who aren’t compliant. And in fact, landlords who are able to demonstrate that their properties have a higher than “C” rating could be more competitive than “C” rated properties. The cost of living crisis presents this as an opportunity. The more efficient a property is, the cheaper it is to run at a time when energy bills, food prices, inflation and the cost of living are all rising fast.
What next?
Carry out an EPC Certificates check. If you’re not up to date or want an accurate, current assessment there are companies that can carry out that work for you. Once you have this information you can look at what you need to do. That could be loft or wall cavity insulation, replacement of white goods, doors, or windows. Your property works as a single unit with a “u value”. So if you have really good loft insulation but drafty windows your u value will be affected, and the energy efficiency of your property affected.
How can Hawkhurst Invest help?
Our team is here to help you succeed in property investment. We have built up a network of experts and professionals to support our clients. If you’re concerned about the cost of upgrading your property, you are considering selling, or looking for new opportunities, get in touch here
