How will EPC April changes affect the Property market?

From April 2018 there were some important changes made to the minimum EPC rating requirements for rental properties in the UK. Any property rented out in the private rented sector must have a minimum energy performance rating of E on an Energy Performance Certificate (EPC).

This new rating will be based on C02 emissions for commercial and residential properties. This is the EPC graph displayed on the first page of the commercial energy efficiency certificate.

Landlords are required to commission an assessment of their rental property every 10 years, if it continues to be rented out beyond the 10-year mark. A civil penalty will be imposed for breaches.

For most landlords this will mean that they will no longer be able to rent out a property with a rating of F or G after April 1st 2018.

Who is affected?

Both residential and commercial property in the Private Rental Sector (PRS) will be affected by these EPC changes. Thus, whether a landlord is letting out a commercial property or an apartment to a tenant, it could be unlawful to do so if the property does not meet the new MEES (Minimum Energy Efficiency Standards)

What is MEES?

MEES (Minimum Energy Efficiency Standards) standards were introduced not only to ensure that tenants live or work in an energy efficient building, but also to move few steps closer to UK’s targets of reducing C02 emissions for all buildings. In order to grant new tenancies or leases on residential or commercial properties with an energy performance certificate (EPC) rating below E, will be unlawful, unless the property is registered as an exemption. A failure to meet this will result in the fine up to £5,000.

How to improve your property energy rating?

In order for homeowners to improve their EPC rating above E they should:

  • Make sure any cavity walls are filled with insulation materials, such as foam or beads
  • Replace an old boiler for a newer, more efficient model
  • Ensure the loft insulation is at least 270mm deep to keep the heat inside the property

What will happen if energy rating is below E?

Local authorities will be responsible for ensuring that properties have a minimum energy rating of E. If they conclude that the property performs below this standard, they may issue a fine and stop the Landlord from renting the property.

Exemptions to the legislation change are:

  • The improvement works will devalue the property by 5% or more
  • The landlord cannot get consent to carry out the works either from the tenant, mortgage lender or superior landlord
  • If the landlord cannot afford to carry out any improvement works
  • If the relevant improvement works have been carried out but the energy rating remains under a rating of E
Written by Anethe Carvalho