EPC Changes for Rental Properties

The Government has announced plans to introduce new regulations for the minimum Energy Performance Certificate (EPC) ratings on all rental properties in the UK. All landlords and prospective landlords considering the purchase of a buy-to-let property should be aware of the Government’s proposals. If the new regulations are implemented, it is likely additional costs will be incurred to bring properties up to the required EPC standard and avoid fines.

The Current Rules

The Domestic Minimum Energy Efficiency Standards (MEES) Regulations state that only properties with an EPC rating of A to E are legally allowed to be rented. The Regulations apply to all domestic private rental properties that are let on specific types of tenancy agreement and are legally required to have an EPC.  The majority of residential properties will be affected but you can check the requirements and find further guidance here https://www.gov.uk/guidance/domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance#find-out-if-your-property-is-covered-by-the-regulations

The Proposed Changes

The Government is proposing to change the minimum EPC rating required for rental homes to C. These proposals form part of the Governments’ target of achieving Net Zero by 2050, and result from a government consultation in 2020 which proposed that only homes with an EPC rating of A, B or C are to be offered for rental. If this policy is introduced, it could apply to newly-rented properties from as early as 2025, and existing tenancies from 2028.

Whilst nothing official has been announced as of yet, these plans form part of the Minimum Energy Performance of Buildings (No. 2) Bill which is currently making its way through Parliament. Recent survey statistics suggest almost 60% of homes in the UK have a EPC rating of D or lower, so if these changes are introduced, the majority of landlords and prospective landlords in the UK will be affected.

Landlords and prospective landlords will need to be conscious of the costs required to bring the property up to the EPC rating as set by the new regulations. For prospective landlords, this will need to be contemplated prior to making an offer for a buy to let property on the market. Currently, the maximum amount a landlord is required to expend on improving a property’s EPC rating is £3,500. This is envisaged to increase to £10,000 if the new changes are introduced.

If you are considering purchasing a buy-to-let property please contact a member of our Residential Conveyancing team.