If you own rental property, it is fundamental that you understand the EPC requirements for landlords. Particularly after a series of announcements and changes that might seem confusing.
In September 2023, Prime Minister Rishi Sunak announced that the proposed energy efficiency targets for households, which were set to be enforced by 2025, will no longer take effect.
The stipulation would have required every new tenancy agreement to ensure the related property had an EPC rating of C or above, with this standard extending to all rental properties by 2028.
During his speech Sunak stated, “Under current plans, some property owners would have faced steep costs to upgrade their properties in a mere two years. That’s just wrong. While we’ll continue promoting energy efficiency through subsidies, we won’t make it compulsory for any household.”
So what does this mean for landlords in 2023 and beyond?
What does this mean for Landlords?
For many landlords this will have been a frustrating update, especially given that recent research shows that a substantial 80% of UK landlords had already geared up for the now-annulled 2025 EPC regulation deadline.
The fact remains that rental properties must meet the Minimum Energy Efficiency Standards (MEES) which is to have an energy efficiency rating of E. This means that landlords cannot rent out properties with an energy rating of F or G, unless they have made improvements to the property to raise the rating and gain a formal exemption.
Whilst this change has been scrapped, it’s highly possible that other similar changes will be made in the coming years and this factor has impacted landlord’s investment strategies. A significant 28% of property investors now spotlight newer, energy-efficient properties as their priority for upcoming purchases.
While regulations might waver, the drive towards a sustainable, energy-efficient future in the UK housing sector remains undeterred.
EPCs for Rental Properties
Landlords in the UK are required to have an Energy Performance Certificate (EPC) for their rental properties. An EPC is a document that provides information about the energy efficiency of a property. It includes an energy rating, which ranges from A (most efficient) to G (least efficient). The purpose of an EPC is to help tenants understand the energy performance of a property and make informed decisions about their energy consumption.
The energy rating on an EPC is based on several factors, including the age and construction of the property, the type of heating and cooling systems, and the insulation and ventilation of the property. The EPC also provides an estimated cost of energy for the property, as well as recommendations for improving energy efficiency.
Landlords must provide a copy of the EPC to tenants before they move in, and the certificate must be displayed in the property. The EPC is valid for 10 years, after which time it must be renewed.
Penalties and Legal Requirements
Failure to comply with EPC regulations can result in significant penalties. Local authorities have the power to issue fines of up to £5,000 for not having a valid EPC.
It is also a legal requirement for landlords to provide a copy of the EPC to their tenant free of charge. Failure to do so can result in a penalty of up to £500.
PRS Exemptions Register
There are some exemptions available under the Private Rented Sector (PRS) Exemptions Register. The PRS Exemptions Register is a central database that contains information about properties that are exempt from the Minimum Energy Efficiency Standards (MEES) regulations. Landlords can register their properties on the PRS Exemptions Register if they meet certain criteria.
To register a property on the PRS Exemptions Register, landlords must provide evidence that their property is exempt from the MEES regulations. This evidence may include a copy of a report from a qualified surveyor, or evidence that the cost of making the required energy efficiency improvements would exceed a certain threshold.
Landlords should check the criteria for each exemption carefully to ensure that their properties are fully compliant with the relevant regulations.
Ensuring Your Property is Ready to Rent
Safety Checks
- Install and maintain smoke detectors on each floor of the property.
- Install and maintain carbon monoxide detectors if there are gas appliances.
- Ensure all gas appliances are annually inspected and certified by a Gas Safe registered engineer.
- A valid Electrical Installation Condition Report (EICR) to be in place and provided to the tenant(s).
Energy Performance Certificate (EPC)
- Provide an EPC to the tenant, indicating the energy efficiency of the property.
Tenancy Agreement
- Draft a clear and legally compliant tenancy agreement.
- Ensure both parties (landlord and tenant) have signed and received a copy.
How To Rent Guide
- A document detailing the rights and responsibilities of a tenant as well as the legal obligation of landlords.
Deposit Protection
- Secure the tenant’s deposit in a government-approved tenancy deposit protection scheme within 30 days of receiving it.
- Provide the tenant with the required information about the deposit protection scheme.
Inventory and Condition Report
- Create an inventory and condition report listing the contents and condition of the property.
- Have the tenant review and sign it and provide them with a copy.
Repairs and Maintenance
- Address any necessary repairs and maintenance to ensure the property is in good condition.
- Ensure the property is clean and in a habitable state.
Tenant Information Pack
- Provide the tenant with an information pack containing details about emergency contacts, how to report repairs, and other relevant information.
Tenant References
- Check tenant references, including employment and previous landlord references, to ensure they are suitable.
Right to Rent Check
- Confirm the tenant’s right to rent in the UK by checking their immigration status and documents.
Utilities and Services
- Inform utility companies and the local council of the change of occupancy.
- Provide the tenant with information on how to set up and manage utility accounts in their name.
Access and Privacy
- Establish clear guidelines for property inspections and repairs while respecting the tenant’s right to privacy.
Rent Collection and Payment
- Set up a method for rent collection and communicate payment details to the tenant.
- Clarify the rent due date and late payment procedures.
Tenant’s Contact Information
- Collect and maintain accurate contact information for the tenant, including an emergency contact.
Insurance
- Consider landlord insurance to protect your property and liability.
Exit Procedure
- Outline the process for ending the tenancy, including notice periods and return of the deposit.
Legal Requirements
- Comply with all relevant laws and regulations, such as those related to licensing, HMO (House in Multiple Occupation) requirements, and safety standards.
The specifics can vary depending on your local authority and region, be sure to check these the rules in your area.
A professional property management company will ensure you are fully compliant and have all paperwork up to date.
To learn more about Horton and Garton’s property management service, get in touch.
