EPC Requirements for Rental Properties

Are you a landlord or investor who seeks to gain an understanding of EPC requirements for rental properties in 2023 and thereafter?

In the dynamic world of property investment, staying updated with the latest regulations is paramount.

The year 2023 brings significant changes in the Energy Performance Certificate (EPC) requirements for rental properties in the UK, especially after the scrapping of proposed changes by Chancellor Rishi Sunak.

In this blog, Thirlmere Deacon will delve into the current EPC requirements, shed light on the abandoned proposals, discuss potential fines and penalties for non-compliance, and explore why investing in energy-efficient new build properties remains an attractive option for landlords.

Current EPC Requirements

Energy Performance Certificates (EPCs) have long been a mandatory document for landlords looking to rent out their properties. These certificates provide valuable information regarding the energy efficiency of a property.

As of 2023, the core EPC requirements remain consistent; Landlords are still required to obtain an EPC for their property before advertising it for rent. This document must be made available to potential tenants at the earliest opportunity.

Property that is rented out must achieve a minimum energy efficiency rating of “E” on an A to G scale. This means that properties rated “F” or “G” cannot be legally rented out.

Proposed Changes and Their Abandonment

Chancellor Rishi Sunak had proposed several changes to the EPC requirements in the UK. These proposals aimed to make rental properties more energy-efficient and environmentally friendly.

One of the key proposals was to raise the Minimum Energy Efficiency Standards (MEES) for rental properties from “E” to “C.” This would have compelled landlords to make substantial upgrades to their properties, for some investors, this would have meant incurring thousands of pounds of cost and ultimately this had resulted in landlords choosing to sell their properties.

For this reason and others such as the fact that for certain types of properties or situations, such as listed buildings, where achieving a “C” rating might be impractical, the plans were reconsidered.

Many landlords expressed concerns about the financial burden of upgrading properties to meet the proposed standards, especially in older buildings with limited scope for improvement.

Despite the noble intention of these proposals, they were abandoned to avoid overburdening landlords and potentially further impacting the rental market negatively.

Fines and Penalties for Non-Compliance

Whilst the proposals to increase minimum standards were scrapped, the existing rating requirements remain, and investors should be aware that non-compliance with EPC requirements can lead to significant fines and penalties for landlords.

These penalties remain unchanged in 2023:

Civil Penalty: Landlords who fail to provide an EPC or rent out a property with a rating below “E” can face a civil penalty of up to £5,000.
Rent Repayment Orders: In some cases, tenants may apply for a Rent Repayment Order, which could require the landlord to repay up to 12 months’ worth of rent.
Difficulty in Renting: Non-compliance with EPC requirements can also make it challenging for landlords to find tenants, as prospective renters are likely to be more discerning about energy efficiency.

Advantages of Energy-Efficient New Build Properties

While the proposed EPC changes have been scrapped, investing in energy-efficient new-build properties remains an appealing option for landlords because tenants are increasingly searching for homes that are cheaper to run.

Here’s why:

Higher Attractiveness to Tenants: Tenants are becoming increasingly eco-conscious and cost-aware. New build properties, designed with energy efficiency in mind, tend to have higher EPC ratings, making them more appealing to tenants concerned about utility bills and environmental impact.
Reduced Operating Costs: Energy-efficient properties are designed to minimize energy consumption. This means lower utility bills for tenants, which can be a strong selling point when marketing your rental property.
Future-Proofing: Investing in new build properties ensures compliance with current energy efficiency standards, reducing the risk of future regulatory changes affecting your property’s rental suitability.
Improved Marketability: Energy-efficient properties often command higher rental rates and have a competitive edge in the rental market. They appeal to a broader range of tenants, including environmentally conscious individuals and families looking for cost-effective living.