Home » Energy efficiency and EPC ratings: What Landlords Need to Know

Energy efficiency and EPC ratings: What Landlords Need to Know

arrows pointing to epc ratings and houses

On 20 September 2023, Rishi Sunak confirmed that the pending legislation on minimum energy efficiency standards (MEES) which would have forced landlords to upgrade properties to an EPC C had been scrapped. Instead, they would “continue to encourage households to do so where they can.”

There has been a collective sigh of relief among landlords who would have struggled to afford to retrofit their buy to lets to an EPC C rating. But that doesn’t mean that improving energy efficiency isn’t something that landlords should work towards.

After all, improving the energy efficiency of our housing stock reduces energy bills, improves the quality of life of those living in the properties, and is good for planet.

I have a Victorian buy to let house with an EPC E rating, and I’m going to continue with incremental improvements each year, to improve the property’s energy efficiency, even though I’m not being forced to do this.

This blog post will help those landlords who still want to energy efficiency upgrades to improve your property to EPC Band C. Sharing advice from Chartered Building Engineer and EPC expert, Graham Kinnear, I include 5 practical tips to help you on your journey from an EPC E to EPC C.

Quick fire FAQs on EPC ratings and private rental properties

What’s the latest on EPCs for buy to let properties?

Following an announcement by Rishi Sunak on 20 September 2023, a press release from Number 10 confirmed they would “scrap policies to force landlords to upgrade the energy efficiency of their properties, but instead continue to encourage households to do so where they can.”

This means there has been a U-turn on the MEES rules that were due to be introduced in 2025 for new tenancies and in 2028 for existing tenancies, which would have required buy to let rental properties to have an EPC rating of C.

What is the current minimum EPC rating for rental properties in England?

The legal minimum EPC rating for a private rental property in the UK is an E rating, or an investment in energy efficiency of £3,500. The plans to increase this EPC rating to a C have now been abandoned by Rishi Sunak.

Will rules requiring landlords to have an EPC C come into effect by 2025?

No, the Minimum Energy Performance of Buildings (No. 2) Bill which would have required landlords to have an EPC C by 31 December 2025 for new tenancies, have now been scrapped.

What percentage of private rented properties have an EPC rating of C or better?

According to Table 2(g) of the Energy Efficiency Dataset for England dated March 2022, only 37.5% of existing private rented properties had an EPC rating of C or above. This excludes new build properties. If we include new build properties, the figure is 39%.

What exactly is an EPC?

EPC graph of a Victorian mid-terrace house showing an energy efficiency rating of E with a potential rating of a C
This is the graph from an EPC of one of my rental properties, a Victorian mid-terraced house

The EPC or Energy Performance Certificate was brought in by the European Union to make the energy efficiency of buildings more transparent and comparable. It’s a standard certificate that shows a property’s energy efficiency rating from A (most efficient) to G (least efficient).

To create an EPC, a qualified energy assessor processes information about the building, its heating, lighting, ventilation and air conditioning in government approved software, to produce a score. This score will come under one of the bands in the A to G scoring system. The score is dependent on what is inputted into the software, so it’s crucial the that the information is accurate.

As the EPC assessment is so important, this is not something to delegate. I recommend being there the assessment yourself, so you can provide the necessary proof of your improvements. Also check that an incorrect assumption about the thickness of the roof insulation isn’t made, just because the assessor doesn’t check the loft (see below). If this isn’t practical, then make sure the person you choose to be there has been fully briefed and has the supporting documents. Don’t leave it to your tenants to do.

The above image is from the EPC of my first buy to let, which I bought in 2019. It’s a mid-terrace Victorian house with a cellar. It shows the then current energy efficiency currently, as calculated by the software, and its potential for improvement.

Having a standard certificate theoretically makes it easy to compare the energy efficiency of all properties. This is particularly useful when you are buying a rental property, because it shows you the current rating. You’ll also be able to see some advice on how to improve its energy efficiency. It’s also helpful for renters, who are looking to keep heating bills down.

An EPC is valid for 10 years, although an owner can commission a new EPC at any time. Landlords often update an EPC after carrying out energy efficiency improvements. The EPC is one of the documents that landlords must give tenants before they move in. You also need to give them a copy of any replacement EPC certificate – they need renewing every 10 years. Without giving the tenants the EPC, the landlords can’t serve a Section 21 notice. That said, the EPC can be given to the tenant at any point before the section 21 notice is served.

>> Related Post: How to serve a valid Section 21 Notice

Why has the EPC rating become such a big issue?

With the rising cost of gas and electricity, energy efficiency has become increasingly important for renters and owner occupiers alike. This is stimulating demand for properties that are energy efficient, with an EPC rating of Band C, or better.

Alongside this ‘pull’ factor, is the ‘push’ factor of the now abandoned legislation on landlords and mortgage lenders, originally planned to be introduced for new tenancies on 31 December 2025.

This focus on energy efficiency was part of the UK Government’s commitment to fight climate change and achieve “net zero” carbon emissions by 2030. However, that has now been watered down by adopting what the Prime Minister calls “a pragmatic, proportionate and realistic path to reach net zero by 2050”.

What does the Energy Bill 2023 say about EPCs?

The main focus of the Energy Bill is energy production and security and the regulation of the energy market. However, it contains provisions that enable the government to change the EU-derived Energy Performance of Buildings Regulations 2012, which require the energy performance of buildings to be measured using EPCs.

The Explanatory Notes to the Energy Bill states that the Bill contains provisions which will enable the government to “amend, revoke or replace the existing Energy Performance of Buildings regime to ensure it continues to meet UK-specific objectives”, and is “fit for purpose and reflects the UK’s ambitions on climate change, including to support achieving the UK’s target for net-zero greenhouse gas emissions by 2050.”

The new powers in the Energy Bill mean that the way in which EPCs are assessed in the UK may very well change.

The Energy Bill had its report stage and third reading on Tuesday 5 September 2023, and should receive Royal Assent shortly.

What should Landlords do about a Property with a D or E EPC?

EPC ratings with a model of a house and a stack of £20 notes to symbolise the investment needed to improve a property's energy efficiency
Upgrading properties from an EPC rating of Band D or E to an EP Band C rating requires considerable investment

The Conservative Government will no longer be introducing a requirement to force landlords to upgrade their properties to EPC Band C.

If landlords do decide to try to improve the energy efficiency of their properties, this will be on a voluntary basis.

61% of private rented properties do not have a rating of EPC Band C, according to government data, rising to 62.5% if we exclude new build rental properties. This is marginally higher than the figure for all housing in England, which is 58% (ONS). However, owner occupiers are not obliged to improve the energy efficiency of their properties, even to EPC Band E.

Government figures from 2020 estimated that the average cost of improving properties to EPC Band C is £7,737, but that around 10% would cost more than £15,000. Of course, with recent inflation, This is more than the average gross rent outside of London, currently around £14,700 per year (see Rightmove Q2 2023 figures). In any event, the government estimate will have increased because of inflation.

Only 39% of properties in the private rented sector have achieved an EEP rating of C or above.
English Housing Survey Energy Report, 2020-21, p. 9

5 Tips to improve the EPC rating from Band E to Band C

Landlord calculating the cost of EPC energy efficiency improvements
Improving the energy efficiency rating of a property from an E to a C and requires considerable investment

The task of having to climb from EPC Band E to Band C is enormous. Very few landlords will be able to fund this out of free cash flow, unless they do it over a long period.

In order to try and make this section as practical and helpful as possible, I’ve picked the brains of two experts. Firstly, Chartered Building Engineer and EPC expert, Graham Kinnear of Graham Kinnear Property Consultants. Secondly, Thomas Conneely, gives the perspective of a fellow property investor. He’s a Chartered Surveyor and founder of East Twenty, a property investment and advisory company.

EPC Tip 1: Study the EPC’s breakdown of energy performance

The very first thing to do is to study the existing EPC for your property (or one you’re thinking of buying). You can download it using the government checker. It will have a breakdown of property’s energy performance, which states the assumptions and the score.

Here is the breakdown of the 2018 EPC for my Victorian rental property (score 48):

Example of the breakdown of a property’s energy efficiency performance, where the EPC rating is an E
This is the breakdown from the EPC Band E rating (48) of a Victorian Mid-Terraced house

You should start with checking whether any of the assumptions are incorrect. Next, think about whether any of the problems ave been addressed since the date of the EPC.

Here, the assessor made the assumption there was no roof insulation. The word “assumed” means the assessor didn’t check, probably because they didn’t have a ladder with them. There was actually 100 mm of insulation in the loft, according to the previous EPC. Yet, neither the owner nor the managing agent who supervised this assessment noticed this big anomaly. Lesson: don’t rely on others! Check everything yourself!

When you look at the EPC, do note any quick wins, like the LED lighting, even if this will only improve the EPC by one point. However, one point is one point, and every point helps. It will also benefit your renters. As Graham Kinnear points out, it will reduce the electricity consumption on the lighting by up to 90%.

EPC Tip 2: Study the EPC’s tips to improve energy performance

Extract of an EPC of a Victorian house, the section detailing areas for improvement
This is an extract from the EPC certificate, listing improvements to increase it to a C

This is the most useful part of the EPC. It shows how many points you may potentially get if you carry out each recommendation.

For this one, I knew the previous owner had replaced the old boiler with a condensing combi boiler, so I could take that off my to do list.

However, every building is different, and your priorities for your plan of attack will depend on what will give you the most points. You should also take into account what needs doing to your particular property. For instance, I insulated the suspended floor as the cellar ceiling had started to fall down and it made sense to add insulation when putting in the new ceiling. This cost me almost £3,000, including taking out the old ceiling and replacing the rotten wooden frame window with double-glazing.

In 2022, I replaced 3 small windows with double-glazing as they weren’t in good condition, at a cost of £1,500 including VAT.

EPC Tip 3: Think insulation

man insulating loft of brick house to improve the energy efficiency and the property's EPC rating
Stopping heat escaping is the key to improving an EPC rating

Graham Kinnear advises to start first with the insulation. Houses are in essence boxes, and “an EPC in broad terms measures the building’s ability to retain heat”. Anything you do to increase its ability to retain heat will help your EPC rating.

The easiest place to put insulation is usually the loft, unless it is boarded. Going from no insulation to 300 mm will increase the EPC score by around 8 or 9 points. Graham adds you will get little benefit from an EPC scoring perspective if you increase the insulation beyond 300 mm for existing buildings.

Solid wall insulation is very expensive, and very disruptive and messy if you go back to brick. But this will lead to larger savings on heating bills. Cavity wall insulation, on the other hand, for more modern houses is cheaper. Any sort of wall insulation is likely to have a big impact on the EPC rating.

Thomas Conneely explains there are some practical drawbacks to insulating walls. “It’s important to understand the walls are solid, so moisture has a harder time escaping and circulating in the air”. This means that landlords need to explain to tenants that they need to keep an eye on mould. This is particularly true if tenants use radiators or unvented tumble dryers to dry clothes with the windows closed. Or not putting on the extractor fan when having a shower. Landlords should explain this to their renters.

Graham Kinnear warns about the considerable upheaval to tenants if wall insulation is done when the property is tenanted. It’s better to leave back to brick work for when the property is empty. Get advice from an expert, as old walls still need to breathe and not trap condensation.

In 2022, I increased the loft insulation by 200mm to 300mm, which should get me a “very good”. This extra roof insulation cost £800.

As I mentioned above, I also took the opportunity to add insulation to the suspended floor when replacing the cellar ceiling, also helping the EPC rating. The suspended floor insulation itself only cost £150, but the total cost to take down and replace the crumbling cellar ceiling was £2,300, excluding the new window.

EPC Tip 4: Boilers and heating

Nest Learning Thermostat wall mounted, with hands operating the app on an iphone
Smart thermostats are great to help renters keep down heating costs, but don’t attract EPC points

Heating systems are the foundation of a property’s EPC rating. If your existing boiler is the old fashioned type with a hot water tank, replacing it with a modern condensing combi boiler will considerably improve your energy efficiency rating.

The new boiler also needs to be programmable with a thermostat. Thermostatic radiator valves should be added to at least 75% of the radiators. You can get extra points if your property has different zones, with different thermostats. For instance, one for living space downstairs, and the other for the bedrooms upstairs.

Surprisingly no extra points are given for a smart thermostat, such as a Nest Learning Thermostat. However, if you’re putting in a new boiler, it makes sense to put one in. I have them in all my rental properties. They’re very popular with renters, as they give them full control over the heating from their phone. It also shows them that their landlord is looking after their interests.

EPC Tip 5: Double glazing

first buy to let house as a landlord
The quote to replace the front elevation windows with double-glazing in this Victorian house was £5,400 inc VAT

Installing double or secondary glazing is very costly, and has a lower impact on the EPC than installing insulation per £ spent.

For my EPC, the rating for the windows came out as “poor” because it was only partially double-glazed. Also, the EPC states that the rating would improve a mere 2 points if I installed double-glazing in the rest of the windows. Replacing the windows should be a lower priority than increasing loft insulation, because of the cost. It’s also possible to replace the windows gradually, starting with the ones in worst condition.

Last year, I decided to replace the 3 small windows in my Victorian buy to let that need replacing anyway. The frames had started to rot, and it was time to do something about it. These 3 small windows cost £2,000. This just left the main front elevation to do.

After a bit of shopping around, I decided to take the plunge on the final windows this year. I’ve now replaced replace the front elevation windows shown in the image with six double-glazed UPVC windows. You can see them being installed in the image below. This cost me £5,400 inc VAT. Why six windows? The bay window itself has four separate windows, as you can see.

I’m hoping this will be enough to get an EPC C rating for this Victorian house.

installing UPVC windows in a Victorian House to increase the property's energy efficiency
The installation of the UPVC windows in the bay of one of my Victorian buy to let houses in August 2023

What will the EPC rules be if the Conservatives lose the next general election?

It’s highly likely that the requirements for landlords to reach an EPC Band C will be reintroduced if the Conservatives lose the next general election. The next general election in the UK has to take place before Tuesday 28 January 2025 at the latest (Source: House of Commons Library).

Angela Raynor, who is the Shadow Secretary of State for Levelling Up, Housing, Communities & Local Governmentcriticised Rishi Sunak for “abandoning” energy efficiency in a tweet on Twitter (X), but Labour has not published an official policy on the subject in 2023.

In contrast to Labour, the Liberal Democrats have a detailed policy on housing. At their conference in September 2023, the Liberal Democrats endorsed their policy paper Tackling the Housing Crisis which contains the following about EPC ratings for the PRS:

We would also increase minimum energy efficiency standards for privately rented properties and remove the cost cap on improvements – aiming for rented properties to be minimum EPC Band C in the next 5 years and minimum EPC Band B in the next 10 years where feasible.

Final thoughts on improving landlords and EPCs

The scrapping of the requirement for landlords to do this will have come as a relief to those who would have struggled to pay for the retrofitting work. Now landlords will be free to make changes in their own time, at least for so long as there is a Conservative government.

With the cost of living crisis and the increase in fuel costs, renters are now far more aware of energy efficiency and EPC ratings. Having a buyt to let with a C rating makes it more attractive and easier to let.

Increasing the energy efficiency of a Victorian house from EPC Band E to a C is possible, but expensive. Clearly improving the insulation will make the biggest difference to the EPC rating, in relation to its cost.

The Prime Minister alluded to support being available at his press conference on 20 September 2023. I will update this blog post once the details have been published.

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What landlords need to know about improving EPC ratings

3 thoughts on “Energy efficiency and EPC ratings: What Landlords Need to Know”

  1. Loft Insulation Installer

    I couldn’t agree more with your points in this post about EPC landlords. It’s refreshing to see someone addressing this issue, and your suggestions for tackling it are spot on. Looking forward to reading more.

  2. Some amazing insight into the impact of EPC measures, thanks for such a detailed article.
    Suzanne, (so as not to hijack your post) I’ve separately contacted you RE: retrofit WWHRS for this type of property. It would be good to discuss when you have a moment: ellis@recoup.co.uk

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