Plans for changing the EPC requirements for landlords in 2025 have been scrapped but there are still some important requirements to be aware of.
The housing stock in areas such as London Bridge and Wapping includes historical Georgian houses and conversions of old warehouses. These older properties are often less energy efficient than newer properties, so meeting energy efficiency requirements can be more difficult.
If you are a private landlord in Southeast London, read on for details on the current energy efficiency requirements for landlords and how the requirements may change in the future.
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An Energy Performance Certificate (EPC) provides details of a property’s energy efficiency, energy consumption, and environmental impact. The property will be graded A to G, with A being the most energy-efficient. An EPC is required whenever a property is sold, let to a new tenant, or built. Much like your gas safety checks, it is a part of your obligation to repair the property and keep it in a safe condition.
A Domestic Energy Assessor conducts an Energy Assessment Survey, which involves an assessment of:
The assessor will then produce an EPC that provides the energy efficiency rating of your property.
Yes. By law, other than a few exemptions, all commercial and domestic properties must have an EPC before any new tenancies can be started.
Exemptions for EPCs include landlords of listed buildings, buildings that are intended to be used for less than two years and residential buildings used for less than four months per year.
New laws were introduced for Minimum Energy Efficiency Standards (MEES) in 2018, which included a requirement for private rental properties in England and Wales to meet a minimum EPC rating of E.
The standard MEES regulations came into force on 1 April 2018 for new tenancies and 1 April 2020 for existing tenancies. From these dates, rental properties that do not achieve an EPC rating of E or above must be improved to meet the required EPC rating.
However, there is currently a maximum cost cap of £3,500 per property (including VAT), and if the property owner spends this amount on improvements to the EPC rating, but the property still does not get an EPC rating of E or above, the property is exempt. The landlord must register as exempt on the government’s register.
Landlords are legally required to arrange an EPC assessment and provide a copy of the EPC to tenants before they move in, along with the tenancy agreement. EPCs are valid for 10 years and must be completed by an accredited assessor.
The EPC will detail recommendations for energy improvements and if the required ‘E’ rating is not achieved, the landlord should arrange for the work detailed in the EPC to be carried out to meet the minimum requirements.
If you need to arrange an EPC while you have a tenant living in the property, you must request permission from them to arrange the inspection. This should be done by providing at least 24 hours’ written notice to the tenant.
When you receive your EPC results, they will include the following details:
If your rating meets the requirements, no further action is required but you may want to consider implementing some improvements to improve energy efficiency.
If a rental property does not score a rating of ‘E’ or higher, the landlord is required to arrange for the necessary recommendations to be actioned to improve the rating and meet the minimum requirement. The landlord should then request another EPC assessment so that they have a valid certificate that meets the minimum rating requirement for lettings.
If you make improvements to the energy efficiency rating of your property, landlords are advised to commission a new EPC afterwards to demonstrate the improvements made and any changes to the rating. However, if the EPC remains valid (it is valid for ten years) and your property achieves an ‘E’ rating or higher, you don’t need to take any further action unless you want to improve the EPC rating further to help make the property more desirable to prospective tenants and cheaper to run.
Getting started sooner rather than later is best, as the improvements may take longer than you anticipate, which could lead to a loss of income if you cannot let the property.
Start by looking at your most recent EPC certificate. This will give you an indication of where the energy inefficiencies are and provide you with any recommendations for improvements that can be made.
Upgrading windows and doors to double or triple-glazed will improve energy efficiency. Single-glazed windows lose twice as much heat as double-glazed. This will generally cost between £3,500 and £10,000, depending on the number and size of the windows.
Installing loft and wall insulation can be an easy and effective way to improve energy efficiency. Around one-third of the heat lost in UK homes is through non-insulated walls. Many properties in the UK are built with cavity walls, which can be filled with an insulation material such as mineral wool or polyurethane foam. Wall and roof insulation throughout the property will cost around £4,000 upwards.
Old boilers usually have very poor energy efficiency and replacing them with a new A-rated one will help to improve the energy efficiency. A new boiler can also save on maintenance costs, as it should require fewer repairs, and parts should not need replacing for years. New boilers typically cost around £2,000 to £5,000 including installation.
In suitable properties, installing solar photovoltaic panels will reduce the property’s energy consumption and carbon emissions. Installing solar panels is becoming increasingly popular in the UK. The cost of installing solar panels is around £5,000 to £9,000.
If you are renting your property out with appliances included, ensure they have a high rating for efficiency. Washing machines, fridges, freezers, dishwashers, and ovens with poor ratings should be replaced with ‘A’ or ‘B’ (on the new scale). Appliances with higher energy efficiency ratings cost slightly more than the less efficient ones. The cost of a washing machine with energy efficiency rating ‘A’ starts at around £400.
Switching to LED lightbulbs is a quick and easy way to improve energy efficiency, with residential LED bulbs using at least 75% less energy than incandescent lighting. LED bulbs are similarly priced to standard light bulbs, so they are a very cost-effective switch.
Check your property for any areas that have draughts, such as around windows and doors. You can draught proof using different methods such as sealing gaps with silicone, installing draught strips or hanging thermal curtains. The costs of draught proofing range from £10 to £100.
While the current cost cap of £3,500 will help landlords who can’t afford to pay more on improvements, there is a possibility that this cap could rise in future.
For landlords who cannot afford the costs of improving the energy efficiency of their rental property, certain financial assistance may be available.
For example, the government announced a zero-rate VAT on some materials used for improving energy efficiency. Some local councils also have incentives for improving energy efficiency, so you should also check what financial assistance is available from your local council.
These are some of the schemes that you could qualify for:
This scheme provides funding for heating upgrades such as insulation, smart thermostats and switching to renewable energy solutions. If your tenants receive income-related benefits and your rental property has a rating of D or lower, you could be eligible for a grant.
The Boiler Upgrade Scheme is available for landlords of properties with fossil fuel heating systems such as oil, gas or electric who are switching to an energy efficient heating system such as an air source heat pump or biomass boiler. Landlords can apply for Boiler Upgrade Scheme grants of up to £7,500 can be applied for to help cover the costs of upgrading to an air source heat pump.
This scheme provides free insulation for lofts and cavity walls for households who are eligible. If your tenants meet the low-income threshold, you may be able to claim this for your rental property.
As a landlord, you don’t want a property that is not energy efficient. Why? Not only will the energy bills be higher (and you will have to pay them yourself if you experience any void periods), but you must declare the property’s EPC rating when marketing the property for let.
Tenants are savvy and know that the energy efficiency of a property is important and will affect how much they pay in energy bills. A better EPC rating will make the property more desirable to tenants and, therefore, easier to let. A good rating will boost market value if you sell.
An energy-efficient property will prove cheaper to run and maintain. A warm, comfortable property will be important to tenants. If they are happy and satisfied with living in the property, they will stay longer, meaning a steady rental income for the landlord and fewer void periods.
No, unfortunately for landlords, energy-related improvements are not tax deductible. Improvements completed to improve energy performance are classed as capital expenditure and, therefore, not considered repair and maintenance, which can be offset against profits to reduce your tax bill.
At present, properties require a rating of ‘E’ or above and landlords must take action to improve ratings if they do not meet the minimum energy efficiency requirements. While the proposed changes to upgrade the minimum rating to ‘C’ have been abandoned, the new government may still look to implement alternative changes.
The plans were shelved amidst concerns that landlords would face substantial costs to meet the ‘C’ rating requirements. For example, some private landlords had estimated that the costs could reach over £10,000.
The average property in South East London is rated at ‘D’ or below. This means that a substantial percentage of this market would have required work to meet the proposed energy performance regulations.
Ed Miliband hinted at the new Labour government’s intentions for energy efficiency improvements at the Clean Energy Superpower Mission parliamentary debate on 16 July 2024:
“One thing that this Government will do that the last Government did not is demand that landlords raise the standard of their accommodation to a proper energy performance certificate standard C by 2030.”
Landlords will need to stay up to date with the latest news regarding Labour’s plans, as it is clear that they will be looking to implement changes to energy efficiency standards by 2030.
Get in touch with our lettings team for further advice about EPCs and for guidance about letting your property in London, SE1 areas including Vauxhall and Surrey Quays.
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