If you’re a landlord, you will know that the Energy Performance Certificate (EPC) rules exist to try and make UK homes more energy-efficient. Since 2018, all landlords have been required to present an EPC rating of E or above to legally let out their property on a new lease.
From April 2023, the rules governing EPCs are changing. Even though these changes will require homes to become more energy-efficient over the next three years, a new study has revealed that a worrying number of landlords aren’t aware of the proposals.
Read on to find out more about what is changing, and how it will affect you if you’re a buy-to-let landlord.
Landlords must improve the energy efficiency of properties by 2028
To make properties more energy-efficient, the government has launched new proposals requiring landlords to bring all homes up to a certain EPC standard.
These new rules have been set out as part of the UK government’s plan to reduce greenhouse gas emissions to net zero by 2050.
By 1 April 2023
All buy-to-let properties will need to receive an EPC rating of E or above by 1 April 2023 even if the property is mid-lease.
If you own a property that you currently lease, or one that you plan to lease out in the future, it will need to receive an EPC rating of E or above by April 2023.
If this property receives a rating lower than C, you are still within the law until 2025. However, renovations may be required before April 2025, to rent out your property legally from then on.
By April 2025
All properties under new leases will need to obtain an EPC rating of C or above by 1 April 2025 to be let out legally.
By April 2028
All properties under existing leases will need to obtain an EPC rating of C or above by 1 April 2028 to be let out legally.
What this means is that, to achieve a better EPC rating, your property may need to undergo renovations to become more energy-efficient.
However, new research published by MoneyAge shows that 3 in 10 landlords are unaware of these government proposals and the requirement that all rental properties must have an EPC rating of A, B or C by 2025.
Paul Brett from the firm who commissioned the research says: “Our survey shows that most landlords are aware of the potential new EPC rulings by 2025 and many will have to upgrade their properties to a C rating.”
Steps you can take to make a property more energy-efficient
There are several steps you can take to make a property more energy-efficient. These include:
- Installing double glazing
- Reinsulating the property
- Replacing the boiler, and any other heating sources in the property that are old or broken.
According to Shawbrook Bank’s 2021 report, the Changing Face of Buy-to-Let, 17% of landlords have already taken steps to bring their properties up to the required standard. This figure rises to 22% of portfolio landlords (landlords with four or more properties).
Of the landlords that had undertaken a refurbishment, 1 in 5 (22%) had replaced the boiler and heating system in their property, while a further quarter (23%) had replaced the windows. 18% had installed new white goods.
If you do need to renovate a property, the good news is that you have until 2025 to complete the necessary changes.
However, you may need to plan carefully to minimise the disruption. For example, current or future tenants may have to vacate the property while the building work is being completed.
The law change could be an opportunity for landlords
While bringing your properties up to the required energy efficiency standards might make a dent in your profits, there are possible opportunities that could arise as a result of the rule changes.
The MoneyAge survey indicates that more than half (53%) of landlords said they would consider buying homes that had an EPC rating of D or lower and bring them up to at least a C rating.
Paul Brett continues: “Some of them [landlords], especially the larger portfolio landlords with 10 or more properties, are looking at how they can turn this to their advantage.
“Buying properties and making them more energy-efficient will raise the value of the property and the rental income landlords can charge, as well as reducing tenant’s energy bills. A few extra thousand pounds spent at the buying stage will be an investment for the longer term.”
Get in touch
If you’re considering a property investment, or you’re a landlord looking for excellent buy-to-let mortgage advice, please get in touch. Email [email protected] or call us on +44 (0) 20 3411 0079.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.
