Energy efficiency rules for landlords.
When you set up any new tenancy agreement as a landlord, you’re obliged by law to provide the tenants with a copy of the property’s Energy Performance Certificate (‘EPC’).
Your property may already have an EPC, and you can view your property’s EPC on the Government’s online register using nothing more than its postcode.
The register is free and open to all, so you can view the EPC for any property that’s been sold or rented out since EPCs were introduced in October 2008. It’s an opt-out service, so some properties may be missing.
What is an EPC?
It’s a report on your property’s energy efficiency, both currently and if some improvements were made. Your property will get an overall rating on a scale running from A to G. A is the best, and G the worst.
You’ll also see a numerical score between 1 and 100. This indicates how expensive running the property will be; the lower the score, the higher the cost.
Generally speaking, older properties have lower ratings, because they lack (for instance) cavity wall insulation or double glazing unless these have been retro-fitted.
Which rented properties need an EPC?
- Rented houses, HMOs and self-contained flats need their own EPC.
- Bedsits and non-self-contained flats don’t need an individual EPC, but the property they’re part of does.
You don’t need an EPC if you’re just renting out a room in your own home.
How to get an EPC
If you use a lettings agent, they’ll probably offer to arrange an EPC for you (at a cost). You can, if you wish, arrange your own and compare the price.
EPCs on rented properties
Your property’s EPC is valid for 10 years, and a copy must be provided to your tenant free of charge. You can be fined £200 if you don’t.
Since 1st April 2018, any property that’s rated F or G must be brought up to at least an E rating before it can be rented out. Landlords who do not meet this standard face fines of up to £5,000.
Typical improvements you may need to make include the installation of insulation (loft and/or cavity wall), double glazing, or central heating. Some listed properties and those in conservation areas may be exempt, if improvements (like new windows) would impact on its character.
Further new rules will apply from April 2020 that state any rented property – including those with ongoing tenancies starting before April 2018 – must have been brought up to an E rating standard by this time.
You may not be able to obtain a mortgage if the property does not have a minimum EPC rating of E. At Together, for instance, we insist on seeing a copy of the EPC for all mortgages and remortgages, where the property is currently being let or you intend to let it in future.
If the property is being let and has an EPC rating of F or G, we:
- Will perform a full, in-depth affordability assessment during the application process.
- May ask for information about how you’re addressing the EPC rating.
- May reduce the loan-to-value we’re prepared to offer.
Applying for an exemption
If you’ve been told that you need to make improvements to your rental property, you’re not expected to make any changes:
- If you can’t get funding for them via the Energy Company Obligation (ECO), Green Deal Finance, or a grant from the local authority; or
- Without your tenant’s consent.
In these instances, you can apply for a five-year exemption.
You can also apply for an exemption if:
- The changes would contravene planning rules.
- The changes would devalue your property by more than 5% (an estate agent’s valuation will confirm this).
Once the exemption period is over, your case will be reassessed to see if it can be given a further exemption.
Lending decisions are subject to an affordability/creditworthiness assessment.
Any property used as security, including your home, may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.