The government has opened a new consultation into the energy performance of buildings – and some of the proposals on the table could create new costs for residential landlords.
New domestic scoring system could affect landlord targets
At the moment, home energy efficiency is measured using the Energy Efficiency Rating (EER), which predicts the cost per square metre to heat the property. But the government says this is based on assumptions about fuel costs that can quickly become outdated, and it doesn’t track other important factors like carbon emissions.
Their proposed solution is to replace the EER with four separate scores:
- Fabric performance, which measures how well insulated the building is
- Heating system, which measures the efficiency and carbon emissions of the building’s heating
- Smart readiness, which measures “a building’s potential to integrate smart technologies that can optimise energy consumption”
- Energy cost
Any change to how EPCs are measured will have big implications for landlords, who will need to know what scores to achieve across all four metrics. Currently, all non-exempted properties in the private rented sector need to achieve a minimum EPC of E. From 2030, properties will need to be at least EPC C to be rented out.
Either way – now or then – landlords will need clarity on EPC scoring quickly, to know which upgrades to make to their properties.
The government’s decision could also have huge cost implications. A report by Reapit earlier this year found that 2.7 million privately rented homes would need to be upgraded by 2030 at a total cost of £24 billion. On average, landlords will face a bill of over £10,000, and hundreds of thousands could quit the sector instead of paying. The new proposals could potentially add to this cost burden.
More frequent renewals could mean higher cost
The government is also looking into reducing the length of time that EPCs are valid for – currently 10 years. Their preference is for the shorter validity period to only apply to newly issued EPCs, but they are also consulting on reducing the validity of current EPCs.
Taken on its own, this wouldn’t change much for landlords. As things stand, the EPC only needs to be valid when the property is first let, and not when tenants extend their lease. But the consultation also looks into whether landlords should have to keep a valid EPC throughout a tenancy instead of just at the start. If the EPC expires while there is a tenant in place, the landlord would have to renew the certificate.
Additionally, landlords could be barred outright from marketing properties for rent without an EPC in place, losing their current 28-day grace period. HMO landlords may also need a valid EPC in place when letting a single room. At the moment, an EPC is only needed when renting out the entire house.
If you would like to respond to the consultation, you can do so online, by e-mail or by post using the details on the government’s website.
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