The Labour government has resurrected the Conservative’s ambitions to force landlords into upgrading the energy efficiency of their properties to a minimum standard of C. The new target is 2030, and is part of the Plan for Change strategy, which aims to improve standards in rental homes and reduce energy costs.
The rules will force landlords to spend thousands of pounds within the next five years if they want to carry on renting out the property. It is estimated that three million rental homes will require upgrading, which will likely force some landlords to sell up and others to increase rental costs to absorb the impact.
Rightmove’s Tim Bannister said: “In the rental market, through discussions with agents and our research, we know landlords want to provide comfortable, energy efficient homes, but ‘green’ upgrades can be costly. For landlords of lower-value properties, the financial returns may not always justify the investment.”
What is an EPC?
The Energy Performance Certificate (EPC) of a property is a legal requirement if you sell, lease or rent out property. The EPC is based on the amount of energy the property uses per square metre and the level of carbon emissions in tonnes each year.
EPC ratings range from A (extremely efficient) to G (extremely inefficient). The minimum rating since 2021 for rented property has been E – anything lower has led to landlords being fined up to £5,000. This fine may in future be increased to £30,000.
If your home has an EPC, you can find out the rating on the government portal. The Certificate expires after ten years, after which a new assessment needs to be made if the property changes hands.
How can I improve the EPC?
Lots of measures contribute to improving the EPC although the costs vary and some are more worthwhile than others. For instance, improving attic insulation costs a few hundred pounds and can significantly improve the efficiency of the heating system, saving money in the long run. More expensive measures might including replacing the heating with a heat pump or installing solar panels, both of which will cost several thousand.
The EPC will suggest the improvements that can be made to the property.
If the property does not have modern double glazing, loft insulation or an up to date boiler, this might be the place to start. Similarly, simply replacing light bulbs with LED can tip the property into the next rating band.
The roof is where a quarter of heat is lost in an uninsulated home. Loft insulation alone can save an average £335 in energy bills in the typical semi-detached property and the investment should pay for itself many times over.
Cavity wall insulation can also provide big savings but you should always ask a Chartered Surveyor for an opinion on whether this is suitable for your property as it can cause damp issues and is not suitable for every home.
Will net zero make gas boilers redundant?
The minimum standards for energy efficiency in newly built properties will preclude the installation of gas boilers. However, the Conservative’s plan to phase out gas heating for older homes by banning the sale of new gas boilers by 2035 has been scrapped by Labour. The policy would have forced people replacing their gas boilers after that date to instead buy a heat pump or other environmentally friendly way of heating their home.
The government is still encouraging the take up of retrofitted heat pumps by offering financial incentives in the form of a £7,500 grant. It should be noted that in older homes, in particular, the installation of a heat pump is not likely to increase an EPC to a C-rating and may even reduce the rating if it increases electricity usage. This is because gas is incentivised over electricity, although this may soon change.
The Warmer Homes Plan has pledged funding of £6.6 billion towards the upgrade of homes ranked below EPC C. However, this is a drop in the ocean compared to the estimated £23 billion needed to upgrade the number of existing rental properties.
Experts advise that most home owners don’t yet need to change their heating system if they have a modern, efficient gas boiler.
As a landlord, hoping to improve the EPC of a rental property, the installation of expensive heat pumps or solar panels is not currently worth the outlay.