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With EPC regulation changes being introduced as early as 2025 you need to start planning improvements now to bring your property to a band C.
Written by
Ben Luxon
PUBLISHED ON
30
Aug
2021
With the impacts of climate change becoming ever more evident, and fast-rising energy costs, more and more renters are moving “energy-efficient” towards the top of their list of desired rental features. Despite this, when it comes to making improvements on the property landlords historically haven’t prioritised eco-friendly options. The costs involved are too steep and they don’t realise the difference this can make to the marketability and value of their property.
However, with the proposal to shift all rental properties to an EPC rating of C and above by 2025 making your rental property more eco-friendly is no longer a choice but a necessity. We take a look at some of the key benefits of improving your EPC rating, a selection of suggestions for improving your EPC rating and a few options for funding the improvements necessary to upgrade your property for the new EPC regulations before they come into effect as laid out by the government.
When someone talks about improving the eco-friendly nature of property often people’s minds jump immediately to a vision of solar panels. However, despite various government grants the cost of solar panels is prohibitive, and recouping that cost can take a great deal of time.
However, there are smaller, more justifiable improvements that can be made to a property, from installing a smart thermostat to reducing drafts and improving window glazing. These adjustments will not only increase the overall EPC rating of your property but actually make the property more appealing to prospective tenants. It will reduce their overall energy costs, and make the home more comfortable and pleasant to live in. Both of which are factors that could influence a tenant to stay in the property for another year removing the need for you to go through the time-consuming and sometimes expensive process of replacing them.
The UK government recently committed the country to reduce greenhouse gas emissions by as much as 78% by 2035. Housing has been identified as a key area where potential savings could be made.
As such, the UK government introduced a minimum EPC rating that every buy-to-let property must achieve to be deemed suitable for habitation and in order for you to legally be able to let it out.
Additionally, as consumers and tenants become increasingly more environmentally conscious tenants are increasingly looking for more energy-efficient rentals. Having a higher EPC rating will not only benefit your tenant’s pockets but allow them to live more sustainably which is a big draw for some.
New buildings are all designed to be eco-friendly with good insulation in the walls and roof as well as double – or even triple-glazing. Older buildings though particularly period ones tend to be draughty, with ill-fitting doors, and single glazed sash windows, which, whilst beautiful, leak heat like sieves. Installing double glazing or fitted shutters is just one easy way to improve an old building EPC rating.
As we mentioned, solar panels are an obvious option, but they aren’t always possible, may not be suitable for you let, and are rarely the cheapest option. Here are 5 more ways that you can consider to make your property more energy-efficient.
Old boilers are notoriously inefficient, they are also liable to breaking (maintenance fees can end up costing more than a new boiler in some cases!), and just less effective than newer designs. For all of these reasons, new boilers are a big draw for new tenants. Nobody wants an elderly boiler that gives out after ineffectively heating the building in the dead of winter. We’ve all been there, and we’ve all hated it.
Something as simple as properly insulating your loft can have a huge impact on energy bills. Insulating an older home could save tenants hundreds annually. Plus, the impact of the current insulation is poor or non-existent, is instantaneous. Your tenants will very quickly notice the warmth that the new insulation retains.
And don’t miss out on an opportunity to save money – always make sure to check with your local council to see if they have any grants or schemes in place for landlords.
If you haven’t already, upgrading a property’s windows to double or even triple glazing can help reduce the overall energy needed to keep it warm. This can make a big difference in the overall properties of energy efficiency.
We all know the bulbs that take an age to turn on and give off an inadequate orange glow that fails to really light up a room. We don’t mean those. The technology behind energy-efficient bulbs has improved massively over the last few years and they are now similar in effectiveness to non-eco-friendly ones, only they use far less energy.
It’s well worth focusing on bulbs because people are bad at remembering to turn them off, notoriously bad.
Smart metres can help reduce energy consumption and bills, particularly in winter. They give you much more complete control over your energy consumption – carefully and accurately monitoring gas and electricity readings and allowing careful adjustments to the system from your smartphone – even when you’re not at home.
These measures will improve the energy performance of your dwelling. The performance ratings after improvements listed below are cumulative, that is, they assume the improvements have been installed in the order that they appear in the table.
Source: Domestic private rented property: minimum energy efficiency standard – landlord guidance
Currently, there is a cost cap of £3,500 (including VAT) on energy efficiency improvements. This means you won’t be required to spend more than this amount when making improvements to a buy-to-let property’s energy efficiency.
If you cannot improve your property to EPC E for £3,500 or less, you should make all the improvements that can be made up to that amount, then register an ‘all improvements made’ exemption.
However, it’s worth noting that they plan to increase this cost cap to £10,000 when they implement the new recommended EPC rating of C.
There are 3 ways to fund the improvements to your property:
If you are able to secure third-party funding to cover the full cost of improving your property to EPC E, you can use this and you don’t need to invest your own funding.
In this scenario, the cost cap does not apply you should make use of all the funding you secure to get your property to band E, or if possible higher. Funding can include:
If you can secure third-party funding but it is less than £3,500, and not enough to improve your property to EPC E you may need to top up with your own funds to the value of the cost cap.
Please note: you can count any energy efficiency investment made to your property since 1 October 2017 within the cost cap if your property can be improved to E for less than the cost cap, that is all you need to spend
If you are unable to secure any funding, you need to use your own funds to improve your property. You will never need to spend more than the cost cap.
You do not need to spend up to £3,500 if your property can be improved to EPC E for less. If you can improve your property to E for less than the cap, you will have met your obligation.
If it would cost more than £3,500 to improve your property to E, you should install all recommended measures that can be installed within that amount, then register an exemption.
If you have made any energy efficiency improvements to your property since 1 October 2017, you can include the cost of those improvements within the £3,500 cost cap.
In order to let your property at this time you need to have a valid EPC rating of E or above. If you don’t you will be required to make the necessary improvements not doing so could result in fines.
It’s a good idea to start planning for the future and looking at improvements that you can make over the next few years on your property to bring it up from an E or D to the C that will be required for new tenancies after 2025. The improvements required could quickly add up to a substantial cost so by panning for them now you can spread that cost out and mitigate the financial damages.
On a final note, getting an EPC rating can also be seen as an opportunity to make your property more desirable to renters helping you keep tenants happy and vacancy periods to a minimum thus actually saving you money in the long run.
You can review the consultation document regarding the change in requirements to get an EPC rating of C by 2025 here: Improving the energy performance of privately rented homes: consultation
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