The imperative of energy efficiency in rental properties
An Energy Performance Certificate (EPC) plays a crucial role in determining a property’s energy efficiency, assigning it a rating between A (most efficient) and G (least efficient). These certificates hold validity for a decade. Since the year 2018, there has been a legal mandate requiring properties to have an EPC rating of at least E to be eligible for leasing.
This threshold is set to increase in 2025; properties will be mandated to have a minimum EPC rating of C. As a landlord, you have a legal responsibility to read through recommendations in your EPC report and ensure your property meets the legally required rating.
Regulatory changes and their implications
The introduction of a minimum EPC rating of C by 2025 aims to diminish carbon emissions from buildings and enhance home energy efficiency. This regulation stipulates that all new tenancies commencing from December 2025, along with existing tenancies by December 2028, must occur in properties that meet or exceed a C rating.
Steps towards enhanced energy efficiency
It is advisable for property owners to commence enhancement works on their properties sooner rather than later, particularly if substantial construction work is required to meet the forthcoming energy efficiency standards.
Some strategies for improving a property’s energy efficiency include the adoption of low-energy LED lighting, ensuring adequate pipe insulation, installing a condenser boiler, sealing any gaps in loft hatches, doors and pipes, and using draught excluders.
Exemptions and considerations for property owners
Certain exemptions are available for landlords where the cost associated with upgrading a property’s Energy Performance Rating exceeds £3,500 plus VAT. Such properties can be registered on the exemption register for a period of five years.
Furthermore, there are several scenarios in which properties might be exempt from requiring an EPC, including temporary structures utilised for less than two years, places of worship, certain industrial sites, workshops, non-residential agricultural buildings with minimal energy usage, detached buildings with a total floor space under 50 square meters, and properties slated for demolition with the necessary planning and conservation consents in place.
The evolving regulatory landscape
Navigating the complexities of EPCs and adhering to the evolving regulatory landscape requires careful consideration and planning. For landlords and property owners looking to ensure compliance and enhance the energy efficiency of their properties, now is the time to act.
Should you require further information or assistance in understanding how these changes may affect your property, do not hesitate to speak to a member of our team.
Looking to find the right funding solution for your property investment requirements?
If you want to borrow money to acquire an investment property to rent out, you’ll need a buy-to-let mortgage. Our expert team will discuss your options to find the right funding solution for your requirements. So whether you want to purchase an investment property or remortgage an existing property, speak to our specialist team.
Please note: this is a long term investment which you hope will generate rental income along the way and a profit when you sell the property, but bear in mind that if you need access to some cash, a property can take time to sell or remortgage. If house prices fall, you might not be able to sell for as much as you had hoped. You would have to make up the difference if the property sold for less than you owe – a risk that increases, the higher the percentage you borrow. If you sell for a profit, you may have to pay capital gains tax. Don’t forget that with a variable rate mortgage, your costs will rise if interest rates go up. This would eat into, or even wipe out, your income and profit. It is recommended that you also maintain access to emergency funds to cover your mortgage payments during ‘void periods’ that may arise whilst you have no tenant and the property is not let. Please also note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
