Calls for Energy Performance Certificate Reform: What It Means for Landlords

Energy Performance Certificates (EPCs) have become a cornerstone for assessing the energy performance of buildings. However, the current system has been criticised for being outdated and inadequate for modern energy efficiency goals. Elmhurst Energy, a leading authority in the energy assessment sector, is calling for significant reforms to the EPC system. But what would these changes mean for landlords, especially in the context of the upcoming General Election and the possibility of a new government?

Let’s delve into the proposed reforms and their implications.

The Need for Reform

The current EPC system was introduced to provide a cost metric showing how cheap or expensive a home is to heat. However, as Stuart Fairlie, managing director of Elmhurst Energy, points out, the role of EPCs has expanded far beyond their original purpose. EPCs are now used to drive policies aimed at cutting carbon emissions and reducing energy consumption. Yet, without substantial reform, they are like “using blunt scissors to cut grass” – capable but inefficient and imprecise for the tasks they are now required to perform.

Proposed Changes to EPCs

Elmhurst Energy suggests a comprehensive overhaul of the EPC system, incorporating several key changes:

• Inclusion of the ‘Three Cs’: Energy Consumption, Energy Cost, and Carbon Emissions
• Frequent Renewals: Every Three Years or Upon Significant Changes
• Synchronisation with Other Standards: Home Energy Model and Future Homes Standard
• Rebalancing Tax Applied to Fuel
• Reinstating Minimum Energy Efficiency Targets
• Creation of a Retrofit Advice Hub

Each of these changes has specific implications for landlords.

1. The ‘Three Cs’ Approach

Under the new proposal, EPCs would measure energy consumption, energy cost, and carbon emissions – collectively known as the ‘three Cs’. This triad offers a more comprehensive and accurate assessment of a building’s energy performance.

Implications for Landlords:

• Enhanced Data Requirements: Landlords will need to provide detailed information about energy consumption and costs, possibly necessitating the installation of smart meters and other monitoring devices.
• Better Transparency: More detailed EPCs will provide clearer information to tenants about potential energy costs, making properties with good energy ratings more attractive.
• Potential Costs: Collecting and managing the data required for the new EPCs might involve additional expenses.

2. Frequent Renewals

The proposal suggests that EPCs should be renewed every three years, or whenever significant changes to the property occur that could affect energy performance.

Implications for Landlords:

• Increased Administrative Burden: More frequent renewals mean landlords will need to stay on top of their EPC assessments, ensuring timely updates.
• Regular Upgrades: To maintain or improve their EPC ratings, landlords might need to invest regularly in energy efficiency improvements.
• Higher Costs: The cost of frequent assessments and potential upgrades could be substantial, though these could be offset by higher property values and lower energy costs over time.

3. Synchronisation with Other Standards

The proposed reforms aim to align EPCs with the Home Energy Model (HEM) and the Future Homes Standard (FHS), which are part of broader energy efficiency initiatives.

Implications for Landlords:

• Comprehensive Compliance: Landlords will need to ensure that their properties comply not only with EPC standards but also with HEM and FHS criteria.
• Future-Proofing Investments: Aligning with these standards will help landlords future-proof their properties against further regulatory changes, potentially increasing their long-term value.

4. Rebalancing Tax Applied to Fuel

Currently, low-carbon heating solutions like heat pumps are more expensive than traditional gas boilers due to how green levies are applied. The proposed reforms suggest shifting these levies to gas rather than electricity.

Implications for Landlords:

• Cost Incentives: Shifting the green levy to gas will make electric heating solutions like heat pumps more economically viable, encouraging landlords to adopt these technologies.
• Investment in Upgrades: Landlords may need to invest in new heating systems, which could involve significant upfront costs but result in long-term savings and better EPC ratings.

5. Reinstating Minimum Energy Efficiency Targets

The proposal includes reinstating energy efficiency targets for the private rented sector. Non-domestic properties would need to achieve EPC C by April 2027 and EPC B by April 2030. For domestic properties, the target is EPC C by April 2028, with a phased approach for existing tenancies.

Implications for Landlords:

• Mandatory Upgrades: Landlords will be required to make necessary upgrades to meet these targets. This could include insulation improvements, window replacements, and heating system upgrades.
• Compliance and Penalties: Non-compliance with the new standards could result in penalties or an inability to rent out properties.
• Increased Property Value: Meeting higher energy efficiency standards could make properties more attractive to environmentally conscious tenants and buyers, potentially increasing their value.

6. Creation of a Retrofit Advice Hub

A proposed retrofit advice hub on GOV.UK would provide landlords and homeowners with information on energy efficiency improvements and retrofits.

Implications for Landlords:

• Access to Information: Landlords will have access to reliable, government-backed information on the best energy efficiency improvements and the order in which to undertake them.
• Guidance on Green Finance: The hub will provide information on financing options for energy efficiency improvements, helping landlords to manage costs effectively.
• Professional Support: The hub will signpost to accredited professionals, ensuring that landlords can find qualified contractors for their retrofit projects.

The Election Context

With a General Election looming on 4th July 2024, the future of these proposed reforms is closely tied to the political landscape. The outcome of the election could significantly influence the direction and implementation of EPC reforms.

It brings a period of uncertainty and potential change for the property sector. For landlords and letting agents, the outcome could significantly impact how they operate. Staying informed and prepared will be crucial in navigating the post-election landscape, regardless of which party comes into power.

At Symple, we are committed to helping our clients streamline compliance processes, ensuring they never miss a deadline and can adapt swiftly to new regulatory requirements.

With just a click, you can automate compliance tasks, keep property certificates in one place, and deal with pre-vetted, local providers.

For more information, visit Symple.