In recent years, the UK government has been actively working towards achieving its goal of net-zero carbon emissions by 2050. One of the key strategies in this endeavour has been to rework Energy Performance Certificate (EPC) policies.
Current Requirements
As of April 1st 2018, the Minimum Energy Efficiency Standard (MEES) regulations have dictated that all properties being let or sold in England and Wales must have a minimum EPC rating of E. This is extended to April 1st 2020 to encompass all tenancies (not just new ones or renewals). These standards require compliance with a maximum cost cap of £3,500 per property. Landlords who invest this amount into improvements but still fail to meet the minimum EPC requirements can register for an exemption.
Previous Proposals for Reform (2020)
In pursuit of the 2050 net-zero target, the government initially proposed that landlords must ensure their properties have an EPC rating of C or higher. This target was set to be achieved by April 1st 2025 for new tenancies, and April 1st 2028 for all existing tenancies. By 2028, proposals also suggested increasing the penalty for not having a valid EPC from £5,000 to £30,000.
Additionally, the government planned to phase out oil and LPG boiler installation in off-gas-grid homes by 2026, as well as increasing the cost cap for compliance to £10,000 per property. This move was anticipated to bring more than 90% of D properties, and 60% of E properties, to a C rating. A ‘fabric first’ policy was also to be introduced, emphasising improvement to a building’s fabric (insulation, windows, doors etc.) over additional measures such as new heating systems.
Current Status of EPC Reform Proposals (September 20, 2023)
As of the most recent update, the government has scrapped the majority of these proposals, and indicated that there are no plans to revisit them in the foreseeable future. Landlords will instead simply be encouraged to upgrade the energy efficiency of their properties. The government has also relaxed the policy changes for boilers, now allowing oil and LPG boiler installations in off-gas-grid homes to continue until 2035. One notable development however is the Boiler Upgrade Scheme. The scheme has had a grant increase of 50%, up to £7,500, to facilitate the switch from gas boilers to air source or ground source heat pumps.
Opinions from the Property Industry
With potentially upcoming deadlines for huge changes to be made, many landlords have already taken action to improve the energy efficiency of their properties. Research by Shawbrook Bank has revealed that 80% of landlords were already prepared for the 2025 deadline, with 30% already having A-C ratings, and half having concrete plans to improve their properties’ EPC ratings by 2025. On the contrary, only 17% of landlords admitted that they are not yet prepared. In regards to previous rumours about the delay in EPC improvement policies, 31% expressed relief in the idea of having more ‘breathing space’, whilst 29% said they will progress with improvement plans regardless.
With the reversal of these new policies, landlords are left in a state of uncertainty. The sudden shift in energy efficiency targets is a stark reminder of the ever-changing nature of government policies, highlighting the need for landlords to remain alert. With future policies likely still prioritizing sustainability, and tenant preferences shifting toward energy efficient living spaces, investing in sustainable property is likely still the ideal route to take.
