The Energy Performance Certificate (EPC) was introduced in 2007 for standardised ratings for the energy efficiency of commercial and residential properties. An EPC gives a property an energy efficiency rating from A to G which looks at factors such as the age, type of building and its construction, insulation and heating system.
When are EPC’s required?
-
When a building is sold or rented out
-
When a building under construction is finished
-
After refurbishment when there are greater or fewer separate parts of the building and the modification includes the provision or extension of fixed heating, air conditioning or mechanical ventilation system
How long is an EPC valid?
-
For ten years
-
And so long as no other EPC has been entered on the register
Minimum requirement for renting
The Minimum Energy Efficiency Standards came into force on April 1st 2018. This required all properties being let or sold in England and Wales to have a minimum EPC rating of E or above.
What are the exceptions?
The rented property may be entitled to an exemption. The PRS Exemptions Register is for properties which:
-
Are legally required to have an EPC
-
Are let on a relevant tenancy type
-
Cannot be improved to meet the minimum standard of EPC band E for one of the reasons set out below:
-
High cost exemption – Improvements would exceed £3,500 but this only applies only to domestic property.
-
7 Year Payback exemption – The cost of purchasing and installing does not meet the 7 Year Payback test which only applies to non-domestic properties. A measure will fail the 7 year payback test where the expected value of savings on energy bills is expected to achieve over a period of 7 years are less than the cost of repaying it.
-
All Improvements Made Exemption – This applies where all the relevant energy efficiency improvements for the property have been made and the property remains sub-standard. This applies to domestic and non-domestic property.
-
Wall Insulation Exemption – This acknowledged that certain wall insulation systems may not be suitable in certain situations, even where they have been recommended for a property. This applies to domestic and non-domestic property.
-
Consent Exemption – Depending on the circumstance, certain energy efficiency improvements may legally require third party consent before they can be installed in a property. These include external wall insulation or solar panels which require local authority planning consent. This applies to domestic and non-domestic property.
-
Devaluation Exemption – If the landlord has obtained a report from an independent surveyor who is on the Royal Institution of Chartered Surveyors advising that the installation would reduce the market value of the property. This applies to domestic and non-domestic property.
-
New Landlord Exemption – Temporary exemption due to recently becoming a landlord, the exemption will last for 6 months from the date they become the landlord. This applies to domestic and non-domestic property.
A minimum EPC rating of C from 2025?
In the hope to make homes more energy-efficient and reduce carbon emissions, the government has published a consultation on improving the energy performance of privately rented homes. It was stated that:
-
New domestic tenancies to have a minimum rating of C and above by the 1st April 2025
-
All domestic tenancies to reach an energy efficiency rating of C by 1st April 2028
Who does this impact?
This proposed change will impact landlords and they will be required to improve their ratings unless they want to risk a fine for non-compliance. The government also issued a consultation on raising energy performance for commercial buildings to an EPC rating of B by 1st April 2030 for all non-domestic privately rented property. The change has raised concerns as to whether landlords will be able to pay for improvements post-Covid.
For advice on buying or selling properties you can contact our experienced residential or commercial property teams at Farleys Solicitors on 0845 287 0939, by email, or through the online chat below.
