Does your EPC rating really matter?

If you’re a landlord, there are several reasons why you not only need an EPC (energy performance certificate), but should also take note of your rating. Even if you own your own home and don’t rent it out, the significance of an EPC still stands, though different regulations may apply.

Though these largely impact landlords, changes across the board are coming, and it’s important to anticipate and prepare for them.

EPC regulations and legal requirements

In October 2008, the government introduced regulations mandating the acquisition of an EPC prior to any rental property being put on the market. As of 2013, rental advertisements must also explicitly show the EPC rating of the property. In 2015, the Minimum Energy Efficiency Standards (MEES) were introduced, requiring all leased properties to have an EPC rating of E or higher.

In the United Kingdom, the law mandates that both landlords and homeowners who intend to rent or sell their property must get an EPC. Landlords must have a minimum EPC rating of E to legally rent their property. Homeowners must also get an EPC when selling their property.

While increasing your property's EPC rating is not yet a legal requirement for homeowners, it can improve your home's value and minimise its environmental impact.

Upcoming changes to EPC regulations

Starting in 2025, new tenancies in the UK must have a minimum EPC rating of C. The same requirement will apply to existing tenancies from 2028, and non-compliance without exemption registration could result in significant fines.

It's essential to note that landlords are exclusively responsible for the expenses associated with upgrading a property and cannot pass them on to tenants. While landlords may recover some expenses via service charges, it is their primary responsibility to ensure that their properties meet the required standards.

Homeowners are also expected to meet these requirements, with a current proposed deadline of 2035. Up to 15 million homes in the UK may require upgrades, with approximately 60% of the total housing stock in England and Wales (about 25 million properties) requiring work to satisfy these standards.

The benefits of improving your EPC rating

In the upcoming years, enhancing your EPC rating will be essential, and there are advantages to doing so regardless of whether you're a landlord or a homeowner. EPC ratings have been a significant consideration for tenants looking for a new residence since these regulations were introduced. Therefore, having a good EPC rating could sway a prospective tenant's decision in your favour.

Additionally, improving your property's EPC rating as a landlord has several advantages beyond simply satisfying regulatory requirements. Future-proofing your finances is a significant aspect of property investment, and upgrading your EPC can help boost this. By enhancing your property's insulation, heating, and other energy systems, you can reduce your property's environmental impact and appeal to tenants seeking more sustainable options.

If you live in the property, you may enjoy further energy efficiency benefits, saving an average of approximately £400 per year by upgrading from a D to a C. Moving from an E to a C could also result in savings of nearly £1,000.

Compared to a G rating, improving your EPC rating to an A or B could boost your property's value by 14%.

How to improve your EPC rating

Improving your EPC rating can be accomplished through several methods, but it's not a one-size-fits-all solution. You must evaluate your home's requirements to determine the necessary upgrades. For additional information on what upgrades you can undertake and their associated costs, please refer to our article.

Regarding the cost of energy improvements, you can explore options such as the Green Homes Grant programme, or consider remortgaging to free up equity for retrofitting. You may also be able to remortgage to a green mortgage, which has its own perks and incentives.

Working with an expert

It’s important to weigh up the costs and benefits of making upgrades to your home. If you’re planning on remortgaging to pay for renovations, get in touch with one of our expert mortgage advisers before making any major decisions.