Energy Performance Certificate (EPC)
What is an Energy Performance Certificate (EPC)?
The biggest question I get asked is does a landlord need an EPC to rent out their buy-to-let property?
The simple answer is YES ever since the 1st of October 2008 any landlord that markets an investment property for letting needs an Energy Performamce Certificate known as an EPC. Otherwise they risk a £200 fine from the Local Trading Standards Officer.
An EPC is broadly similar to the labels provided with domestic appliances such as fridges and washing machines. They provide a rating of how energy efficient a building is by giving it a rating between A & G, where A is very inefficient. The idea being that tenants can use an EPC to make informed decisions on which property to rent based partly on their likely fuel efficiency. Here is a little update on the Energy Performance Certificate (EPC).
The importance of a valid EPC and a rating of E or above has taken on a greater significance since the expiry of the 1st April 2020 deadline for action under the Domestic Minimum Energy Efficiency Standard (MEES) (SEE BELOW for more details)
When do landlords need an Energy Performance Certificate (EPC)?
The Energy Performamce Certificate and recommendation report must be made available free of charge by the landlord to any prospective tenant at the earliest opportunity. The government defines these “opportunities” as being when
“ any written information about the building is provided in response to a request for information received from the prospective tenant”
“when a viewing is conducted”
If neither of the above takes place then the EPC must be produced before the tenancy agreement is signed.
Is your EPC rating F or G?
What does it mean if your rental property only achieves a rating of F or G the 2 lowest grades. If your rental property only achieves the Domestic Minimum Energy Efficiency Standard then the EPC legislation requires you to take action. Landlords with rental properties that only meet these standards only have until 1st April 2020 to improve their rental property to an E rating or above. If this is not the case then landlords should register an exemption.
How is an EPC report prepared?
An example of an EPC report
Firstly, in looking at how long does an EPC take to prepare? It’s not a long winded process so for the average buy-to-let property an experienced Domestic Energy Assessor should be able to carry out the assessment in between 30 – 60 minutes depending on the size of the rental property. They will then go away and probably be able to email the EPC by the next day at the latest. The basic steps to preparation are:
1. The EPC assessor will carry out an inspection of the rental property noting down the following:
• Size of your living space
• Construction of your house
• Any insulation
• Heating system and controls
2. The EPC assessor will require assess to every room in your rental property and will take a note of the number of light fittings and the number of energy light bulbs present in the fixed light fittings
3. The loft will be inspected during the EPC assessment to survey the amount of insulation present. Currently 270mm is suggested. A note is made of the wall treatment of dividing wall between attached property.
4. An assessment of the glazing of the rental property is carried out noting what level of insulation whether it’s single double or triple glazed. The landlord might be questioned to see if the glazing was installed prior to 2002 and is subject to the FENSA regulations.
5. The biggest part of the EPC assessment is looking at the heating system i.e gas/ electric/ oil and to look at the boilers age and control systems i.e thermostat and individual stats on the radiators
6. During the EPC survey the EPC assessor will take a series of photos to help in the survey but also to provide documentary process to the accreditation body that the survey took place.
7. The final stage of the assessment is measuring up room sizes including ceiling heights to get an idea of the cubic size of each rental property.
All this should take no longer than an hour and cost between £50 – £100.
How do landlords register a MEES exemption for an EPC?
If a landlord’s rental property fails the EPC i.e it is assessed as falling within the worst 2 categories of F or G they must register for an exemption . All landlord exemptions claimed by landlords to improving their EPC on their rental property from a F or G rating must register on the PRS exemption register
Before you register make sure that you have gathered sufficient evidence for your exemption claim. Do not register a false exemption claim as there are significant penalties for a false claim. I have included below some examples of how a landlord can improve the energy ratings of their buy-to-let property to improve their EPC ratings and meet the required standard. These examples have been taken from the UK Gov website:
Sample table of recommendations from the EPC report
These measures will improve the energy performance of your dwelling. The performance ratings after improvements listed below are cumulative, that is, they assume the improvements have been installed in the order that they appear in the table.
|Recommended measures||Indicative cost||Typical savings per year||Rating after improvement|
|Internal or external wall insulation||£4,000-£14,000||£195||E45|
|Solid floor insulation||£4,000-£6,000||£122||E49|
|Increase hot water cylinder insulation||£15-£30||£142||E54|
|Low energy lighting||£20||£21||D56|
|High heat retention storage heaters / dual immersion cylinder||£1,200-£1,800||£319||D67|
|Solar water heating||£4,000-£6,000||£57||C69|
|Replace single glazed windows with low-E double glazed windows||£3,300-£6,500||£123||C73|
|Solar photovoltaic panels||£5,000-£8,000||£287||B83|
If a landlord’s property does fail the EPC standard then they will never be required to spend more than £3500 to improve their rental property. This is referred to the Cost Gap in Government guidance and a landlord who spends to the amount can register their property for an ‘all improvements made’ exemption on the PRS exemption register .
To register for an exemption you will need:
- address of the property
- type of exemption you are registering
- copy of a valid EPC for the property
There are more criteria on exemptions on the Governments own website relating to domestic private rented property minimum energy efficiency standards.
How to improve your EPC rating?
Where do landlords get an Energy Performance Certificate?
Energy Performamce Certificates are available from one of the approximately 7000 qualified domestic energy assessors (DEA’s) that have been recruited to handle the work.
The Government estimates they should cost around £100 but in reallity you can probably get one for around £50.
If a landlord searches the Internet they will be quoted prices over and under £100. Some of the low cost Energy Performance Certificate on further inspection are not quite as attractive as they first appear. With many headline rates excluding VAT. Others offer variable rates for different sized properties and needless to say the low price only applies to a one bed property.
Property Hawk has accessed various EPC providers for value for money and service. We have decided to partner with EPC Choice and are now able to offer EPCs nationally at the simple flat rate of £80 for any size residential property and with all taxes included.
EPC Choice may not be the absolute cheapest, some landlord associations are offering them for less to their members but landlords will then have to fork out the £70 or so to join; however they offer quality service and simplicity.
The good news for landlords is that once done the EPC lasts for 10 years. With any luck Brexit could mean the end of the EPC and it may be the first bit of regulation to be jettisoned in a bonfire of European red tape. There has been in the past a pettion for EPCS to be scrapped set up on the Parliament website.
EPC – Questions & Answers (Q & A)
What is an EPC?
An EPC tells you how energy efficient your property is on a scale of A-G with A being the most efficient. The certificate also tells you on a scale of A-G about the impact the property has on the environment. The EPC will make recommendations about how a property’s energy efficiency can be improved, and will show the potential rating is these works are carried out. The average property in the UK is rated D-E.
What is the benefit to me, the Landlord?
For the first time prospective tenants will be able to compare directly the energy efficiency of properties they are considering renting. Higher rated properties will be considered more desirable on the basis that they will be cheaper to run – Higher Rating=Higher Rents & Less Voids.
My current tenant has 9 months remaining on the contract, do I need an EPC now?
If you have an existing tenant you will not be required to obtain an EPC until your current tenant leaves and the property is ready to be marketed.
Landlords who consider obtaining the EPC ahead of the deadline in order to avoid any potential delays should the property become vacant earlier are able to offer the unique preEPC© whereby your EPC survey can be undertaken now but the lodgment of the certificate can be delayed until the property is next marketed. The landlord then benefits from the maximum 10 year validity of the EPC and also has the opportunity to undertake any of the recommended improvements.
How long is an EPC valid for?
An EPC is valid for 10 years once lodged on the Governments national database www.hcrregister.com . The exception to this is when the EPC is to be included within a Home Information Pack in which case it would need to have been undertaken no later than 12 months prior.
What does the survey involve and how long does it take?
During the survey the DEA collects data about the size of the property, the heating& hot water system, internal or external insulation, glazing and presence of any existing energy saving items. The survey can usually be completed in around 30 minutes and the Landlord need not be present, although may be required to answer certain questions about the property at a later stage.
How do I obtain an EPC and what is the cost?
EPCs can only be produced by a qualified Domestic Energy Assessor (DEA). The DEA must be a member of an accreditation scheme approved by the Government. It is estimated that the cost of an EPC will be around £50. Visit www.epcchoice.com to order your EPC.
My EPC has recommended that I install double glazing, do I have to do this?
Most EPC reports will include at least one recommendation on how to improve your properties rating, you are under no obligation to implement the recommendation although by doing so you may be improving the desirability of your property to prospective tenants.
If I improve my property, will I need a new EPC?
If you undertake any of the recommendations contain in your EPC, it is likely that the rating of your property would have improved. A new EPC should be obtained, although this may not require a further inspection if you are able to provide sufficient information about the improvement works to your Energy Assessor.
What is the penalty for not obtaining an EPC?
The fine for non-compliance is £200. If you are fined, you must still obtain an EPC or risk further fines of £200.
Can I charge the tenant for the EPC?
No. All costs must be covered by the Landlord, but remember to ensure you offset it as an expense against your rental income for tax purposes.
I am renting my property out as 5 rooms and the tenants share the kitchen and bathroom? How many EPCs will I need to obtain?
In this case you will need to provide a single EPC which relates to the whole building which must then be provided to the tenant of each individual room. The trigger for obtaining the EPC will be when the first room is marketed to let after the 1st October deadline.
We have converted our building into three self contained flats all with separate heating systems. Do I need 1 or 3 EPCs?
Any part of a building which is self contained and is being offered to rent will require an EPC, in this case 3 EPCs would be required.
Will the EPC need to be displayed in the property?
This is not a requirement, but the EPC must be made available to the prospective tenant at the earliest opportunity.
Either when the tenant requests any written information about the property such as letting particulars, or when the viewing is conducted, or before entering into the contract. The landlords retains some discretion in providing the EPC if they believe there is little likelihood of the tenant renting the property.
What financial assistance is available to me as a Landlord?
There are a number of schemes available:
The Landlords Energy Saving Allowance (LESA) was available up to 2015 but has now ended.
The LESA allows both private and corporate landlords to claim back up to £1500 per property for the installation of energy saving measures, including loft, cavity wall & floor insulation, upgraded heating systems and draft proofing.
To claim the relief you must have had the expenditure as a deduction in your self assessment tax return. For more information you should visit www.hmrc.gov.uk
Warm Front is a government-funded scheme which provides grants for heating and insulation improvements to make homes warmer, healthier and more energy-efficient. Grants are for people who are on certain benefits and own their home or rent it from a private landlord.
If you are a landlord and your tenants are on certain benefits, grants of up to £2700 are available. The landlord does not have to make any financial contribution, just give consent for the works to be undertaken. The tenant is responsible for applying for the grant, which will then involve a visit from a Warm Front assessor to suggest what improvements should be made.
Your tenants can claim a grant if they are on certain benefits and they have a disability; or have a child under 16 or are pregnant and have a maternity certificate MAT B1; or are 60 and over. Further information can be obtained from www.warmfront.co.uk or by calling Freephone 0800 316 2814. This scheme is only available for households in England.
Local Authority based grants and benefits
Local authorities across the UK offer a wide range of grants and financial assistance to tenants and landlords alike, but the levels of assistance vary from council to council. Landlords are advised to contact their local council who can put them in touch with their local Energy Efficiency Advice Centre or alternatively contact the Energy Saving Trust – www.energysavingtrust.org.uk
Here is some more stuff about EPC and landlords and energy related legislation:
What does Property Hawk think of EPCs?