New energy performance certificates and the Green Homes Grant: Keeping your property green

The Government is encouraging landlords and agents to share their views on its proposals for the next phase of energy efficiency measures planned for the private rented sector. This phase will involve changing the Energy Performance Certificate (EPC) minimum ratings of privately rented homes in England and Wales from band E to band C, and will apply to all new tenancies from 2025 and all existing tenancies from 2028.

In its Improving the energy performance of privately rented homes consultation, which is running until 11.45pm on 30 December 2020, the Government sets out a suite of policy proposals, including raising the cost cap from £3,500 to £10,000 per property.

The move forms part of a wider strategy to upgrade private rented sector homes in response to the legal commitment the Government made in June 2019 to end its contribution to global warming by 2050. Here, we look at what this next phase of measures means for landlords, how the newly launched Green Homes Grant can help, and what landlords can do to improve their EPC rating and get ahead of the game.

 

The Government’s commitment to going green

With housing accounting for around one-fifth of the UK’s carbon emissions, the private rented sector is a key focus for the Government if it is to meet its legal obligation to achieve net-zero carbon emissions by 2050.

This means that, whatever the outcome of the current consultation, landlords need to make sure they are taking the necessary steps to upgrade their properties in anticipation of being ready to transition to low carbon-heat by 2030.

The phasing out of gas boilers has already been announced for new-build properties and it will be illegal to install gas boilers in new build homes from 2025. They will need to be replaced by low-carbon heating systems. While the gas boiler ban doesn’t affect existing properties yet, this is the direction of travel. Many eco-friendly tenants are already on the lookout for greener rental properties and may even be prepared to pay higher rental premiums in exchange for reduced energy bills and peace of mind.

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The Green Homes Grant – what does it mean for landlords?

Landlord groups such as the NRLA have long called for funding to be made available to the sector to encourage landlords to go above and beyond the legal minimum when it comes to carrying out upgrades to their rental properties. This is now more relevant than ever in the aftermath of the coronavirus pandemic, which has been particularly challenging for certain groups, including many landlords.

In a move to help boost the green credentials of future economic recovery, the Government is offering an energy saving boost for landlords and their tenants in England. They will be able to apply to a £2 billion Green Homes Grant scheme to upgrade their properties and make them more energy efficient.

Ben Beadle, chief executive of the National Residential Landlords Association, has said:

“Improving the energy efficiency of rental housing is good news for tenants, landlords and local economies. We encourage all landlords to make use of this as it will mean housing standards are improved, tenants will save money and it will reduce carbon emissions across the whole sector.”

Running alongside the Government’s energy performance consultation, the Green Homes Grant scheme, initially announced over the summer, will offer grants of up to £5,000 per household (£10,000 for low income households).

The grants, which are now available until March 2022 after the Government extended the scheme, which had been due to end on 31 March 2021, will cover up to two-thirds of costs and will be issued as vouchers to give to a chosen TrustMark-registered tradesperson. They are available for specific measures and must include a ‘primary measure’ of either insulation or low-carbon heating, such as a ground or air source heat pump, before ‘secondary measures’, like replacement of windows or draught proofing, can be funded. Vouchers for successful applications should be received in early November.

Find out more about What the green homes grant means for landlords. You can read about the Government’s green homes grant campaign here and apply via GOV.UK here. The Government endorsed Simple Energy Advice website also provides clear guidance as to what upgrades are eligible, as well as other sources of funding such as ECO funding and local grants.

 

Financial impact of increasing minimum EPC ratings

The Green Homes Grant has been warmly received and will certainly help in alleviating the financial burden on landlords, many of whom are already suffering financially due to rent repayment problems brought about by the pandemic. But, given that lots of properties in the private rented sector are older, many with solid, as opposed to cavity walls, bringing them up to level C will have significant cost implications for landlords.

It is therefore very important that landlords have their say and contribute their views to the Government’s consultation process, which includes questions on whether the Government should introduce an affordability exemption and whether respondents agree with the policy proposal to increase the cost cap to £10,000. You can read more about how to make older properties more energy efficient here.

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Are you compliant with current EPC requirements and what’s changing?

Currently, for anyone selling or renting a home in England, Wales and Northern Ireland, an EPC is compulsory. There are different rules for properties being sold or rented in Scotland.

Since 1 April 2018, landlords have not been permitted to let a residential property with an EPC rating below an E on a new tenancy (including an extension or renewal).Tenancies in existence before 1 April 2018 with an EPC rating of F or G were given an extra two years to make appropriate improvements. Since 1 April 2020, these properties have fallen under the scope of the 2015 regulations.

In 2018, new legislation was introduced to improve the energy-efficiency of private rented property in the UK. 

The Domestic Minimum Energy Efficiency Standard Regulations (MEES) currently states that all private rented property must achieve an Energy Performance Certificate (EPC) grade of E or higher. Any landlords renting a property rated F or G (the lowest grade) could face a penalty of up to £4,000. Landlords had until 1 April 2020 to improve any property being rented out – including existing tenancies, not just new ones – to a rating of E, or to register an exemption.

We don’t yet know for certain what the outcome of the Government’s consultation to raise the minimum rating from band E to C, will be. And if the proposed plans do go ahead, they won’t apply to new tenancies until 2025 and existing tenancies until 2028.

But, given the Government’s commitment to achieving net-zero carbon emissions and the need to be ready for low carbon heat options within the next decade, landlords looking to stay in the sector need to be proactive in going beyond the current minimum requirements.

Landlords should now be aiming for a minimum EPC rating of C rather than E. It makes sense for landlords to take advantage of the Green Homes Grant while they can – the extension means the vouchers will be valid for three months from the date they are issued or until 31 March 2022, whichever is earlier as Ben Beadle, CEO of the NRLA, urges landlords in his recent blog for LandlordZONE.

“The system may seem confusing – but it is not often government cash is made available in this way and it is worth remembering that although there is a cost to you as a landlord the improvements will still need to be made at some point when the funding is gone. For help in navigating the process our website now includes a step-by-step guide for accessing the grants for members.”

– Ben Beadle, NRLA

But what does it take to achieve an EPC rating of E (or ideally C), or above? And how can landlords who aren’t sure what their rating is or have lost their EPC find out whether they need to take action?

In this next section, we’ll take a closer look at the EPC and find out how to track yours down, how to schedule a new assessment and how to improve your rating. 

 

What is an Energy Performance Certificate?

Any home that is rented, bought or sold in the UK needs an EPC. This shows how energy-efficient the property is and offers some advice for what could be done to improve its energy efficiency, as well as the likely costs and savings for any work carried out. Once issued, the EPC is valid for ten years, after which time it should be renewed.

Key areas of focus for EPC assessors are:

  • How well-insulated the loft, flooring and walls are
  • Whether windows are single, double or triple-glazed
  • How energy-efficient the boiler, plumbing and radiators are
  • When the property was built and the structure and materials used
  • Whether any electrical heat sources (such as plug-in radiators or fan heaters) are being used
  • Whether modern, energy-efficient lightbulbs are installed
  • The general air-tightness of the home

All of this data will be gathered and entered into a system which will calculate the overall band for your property. The EPC bands reflect the Energy Efficiency Rating (EER) and are a measure of building performance based on the total annual cost of energy to heat and light a property.

The bands run from G, which is the lowest, up to A, which is the highest, representing the buildings with the lowest annual cost of heat and light.

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How do you find your EPC?

It’s easy to misplace documents. If you can’t find your EPC or you’re unsure whether your property has one, these links will help you search for your property in the register of issued EPCs for England and Wales, Scotland and Northern Ireland.

 

How do you book an energy assessment?

If you’re renting or selling your property, you’ll need a valid EPC certificate. If you’ve done work on your property which has improved the energy-efficiency, you may wish to conduct a new assessment so that your certificate reflects actual performance. An assessment can cost up to £120, but the price will be lower than that for most buildings. 

The websites listed above can also help you find an accredited energy assessor in your local area in England and Wales, Scotland and Northern Ireland.

 

What if you rent a listed building?

Because listed buildings have some limitations around what can or can’t be changed, there are some exemptions to the ordinary rules. That said, you still need to meet certain minimum requirements and the only way to find out what they are is to have an energy assessment carried out.

While some options such as double-glazing won’t be an option for listed buildings, there are improvements that can be made that won’t affect the building’s aesthetics, such as installing renewable heating systems and draught-proofing.

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New energy performance certificate: Keeping your property green

 

How can you improve your EPC rating? 

EPCs not only tell you how energy efficient your property is, they also include tips on how you can improve on its performance. So if you want to improve your EPC rating, checking out your EPC is a good place to start.

There are countless things that landlords can do to improve the energy-efficiency of their rental property. These improvements not only save your tenants’ money, they make your property more appealing, which reduces the likelihood of void periods and may even allow you to increase the rent. 

Energy-efficiency has never been higher on our list of priorities as a society, so investing in your rental property’s energy-efficiency is likely to be money well spent.

Here’s a list of key areas you might choose to invest in to improve your EPC rating:

  • Replace glass in windows and doors with double or even triple-glazing
  • Insulate the loft, walls and floors with modern, high-quality insulation 
  • Replace your old boiler or for a long-term solution consider a renewable heating system
  • Upgrade all light bulbs to LED light bulbs
  • Install low-flush toilets and water-saving showers
  • Make sure all white goods and appliances are modern and come with ‘eco’ or ‘energy-saving’ modes

A general principle of improving the fabric efficiency of a building before heat and electricity generation, known loosely as ‘fabric first’ has traditionally been used to prioritise improvements recommended by the EPC. Under this principle, improvements would be made in the following order:

  • Insulation
  • Heating and hot water
  • Windows and doors upgrades
  • Electricity generation measures

Virtually all emissions from housing stock will need to be eliminated if the Government is to meet its net zero target by 2050. During the 2020s, this will mean installing heat loss prevention measures to help reduce energy demand and carbon emissions. This will help support a cost-effective transition to low-carbon heating systems, such as heat pumps and heat networks, which can run at lower flow temperatures.

An EPC rating is calculated on the cost of energy that supplies your heating system. As heating accounts for around 55 per cent of your energy costs, this is where significant saving and improvements to your bills and your EPC ratings can be made.

Air source heat pumps and ground source heat pumps might be expensive, but with the phasing out of gas boilers over the longer term, and tenants increasingly willing to pay a premium in order to reduce their energy costs, it’s worth exploring alternatives to gas boilers next time yours packs up.

Energy-efficiency is becoming more and more important to tenants and regulators. As mentioned earlier, landlords who rent properties which don’t meet the minimum requirements run the risk of receiving a financial penalty of up to £4,000. 

If you’re looking for more information on how to improve the energy-efficiency of your rental property, you can find detailed advice on every aspect of creating a more sustainable rental property in our articles, ‘How to create the dream home for eco-friendly tenants’ and ‘Everything you need to know to be an eco-friendly landlord‘.

Our legislation guide also provides more information on how complying with MEES fits with the other recent legislative changes landlords are facing.

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