Making improvements to the energy efficiency of rented properties is not only beneficial to the tenant but is also good for the planet, our children and generations beyond. In addition the Government has legislated to bring all greenhouse gas emissions to net zero by 2050.
Following a Call for Evidence in 2018 the Government has launched a new consultation to run until 30 December proposing, in a surprise move, that the increase to band D is skipped and that rented properties should achieve a C rating for new tenancies by 2025 with a three year transition period for existing tenancies.
Other than the benefits listed earlier, the one step process would be less disruptive and would cost landlords less in total, however, there is an obvious issue of affordability. So what’s it going to cost? The landlord of an F or G rated property currently has to pay up to the current cost cap of £3,500 including VAT per property on improvements from the list on the EPC. If having spent that amount the property is still below an E rating then an exemption can be registered.
The proposal is to raise that cost cap to £10,000 per property. This brings into scope the more expensive improvements such as solar; condensing boiler and even heat pumps. It appears that many, if not most, landlords will have to make improvements. Some of the housing stock is likely to be incapable of ever achieving a C rating and will require what improvements can be made to be made. Bear in mind too that anecdotally, some newly built properties do not achieve a C rating.
Fabric First
The consultation sensibly proposes that heat loss reduction is the first priority and can most easily be achieved through insulation, which is the most effective improvement, as well draught proofing, and efficient doors and windows. These improvements are the least expensive to install. Ground source heat pumps and other energy generation measures may currently stretch even the £10,000 proposed cap, but in the case of a new build property with a D rating they may be the only improvements available. Government estimates that the average property would cost a landlord around £4,700 to achieve a C rating.
Green Homes Grant
Whether this proposal moves forward or not, the direction of travel is clear. The Government has announced a Green Homes Grant scheme open until 31 March 2022, and available to landlords, where they will pay up to two thirds of the cost of relevant improvements to a maximum of £5,000. The work must be done before the deadline and by a TrustMark registered installer. If property is going to need money spent to improve the EPC rating this will be a very cost effect way to do it.
Other Proposals
Currently an EPC is only required when a property is marketed for sale or let. If its 10 year validity expires during the tenancy then a new EPC is not required until next marketing. It is proposed that a valid EPC will be required throughout the tenancy, as per the gas safety record. It is also proposed to increase the maximum penalty to £30,000 from the current combined maximum of £5,000 as well as giving tenants the right to request improvements and seek compensation for non-compliance.
Have your say at https://www.gov.uk/government/consultations/improving-the-energy-performance-of-privately-rented-homes