What is an EPC rating?

As part of a wider plan to reduce the England and Wales co2 emissions and improve the countries energy efficiency, the government is enforcing changes to the current minimum EPC rating for renting.

Currently, the minimum EPC rating for renting is a grade E or above, this is due to change to a minimum of a grade C taking effect from 2025, giving landlords 6 years to implement changes to their properties to improve their EPC rating.

What is an EPC rating?

EPC stands for Energy Performance Certificate. It measures the energy efficiency of a property on a scale from A-G, A being very energy efficient and G being poor.

Each property is legally required to have an EPC. They are carried out with an Energy Assessment Survey, checking the following areas to determine how energy efficient your property is:

• Windows (single pane, double glazing)
• Roof, walls and insulation
• Boiler and heating system
• Renewable energy devices (such as solar panels)
• Lighting
• Fireplaces
• Building measurements
• The year the property was built

The EPC assessor will thoroughly check these areas and score you an EPC rating.

Once your EPC rating is issued, it remains valid for ten years. However, if you make any changes to improve the energy efficiency, you will want to get another EPC rating before the ten-year expiry date.

After your EPC has expired, you will only need to renew it if you’re letting the property out to new tenants or if you plan to sell the property.

What are the current minimum EPC rating requirements for renting?

With effect from the 1st April 2018, anyone letting out a property must have a minimum EPC rating of E or above. These regulations only apply to let properties, and not to properties for sale. If you don’t have an EPC rating on a property you went to let, then you legally won’t be allowed to let the property until you have made the recommended improvements to improve the property EPC.

There are fines and penalties in place to keep these regulations in check.

What are the penalties for not complying?

If you let out a property that doesn’t meet the minimum EPC rating for less than three months, then there’s a penalty of 10% of the property’s rateable value (minimum of £5,000, maximum of £50,000). If you let it out for more than three months without the minimum EPC rating, then the penalty increases to 20%, which is a minimum of £10,000 or a maximum of £150,000.

You have a legal responsibility to implement any changes suggested in your EPC report. Landlords may spend up to a maximum of £3,500 to improve the property EPC. If the improvements exceed £3,500 you can apply for a high-cost exemption via PRS Exemptions Register or apply for funding or grants given by the government, local authorities or energy companies that offer deals and incentives.

The minimum EPC Rating for renting updates announced in 2021

After a government consultation in December 2020, the government announced changes to the current minimum EPC standards for England and Wales.

The changes mean that all rental properties will need an EPC rating of ‘C’ or above by 2025. The new EPC regulations will be implemented to new tenancies first, followed by all tenancies in 2028.

What properties are exempt from the EPC rating changes in 2025?

Some properties are exempt from the minimum Energy Efficiency standard changes. If your rental property is listed as protected, and the alterations the property needs will unacceptably alter it, it is exempt from the EPC requirements.

Your property is also exempt if it is:

• A temporary building
• Place of worship
• An industrial site or workshop
• Detached buildings with a floor space of 50m or less
• A building that is due to be demolished

How to prepare for the 2025 EPC changes

It is more difficult to achieve an EPC 'C' rating, especially for older properties. The government has recommended and encouraging landlords to install insulation that covers the walls, floors and loft.

Currently, energy performance investment is capped at £3,500 for landlords. However, with the recent changes to a minimum EPC rating, the cap will be raised to £10,000.

It will cost landlords on average £4,700 to improve the EPC rating. However, as a landlord, you can apply for a Green Homes Grant, which will help fund at least two-thirds of the costs of hiring people to carry out insulation and other improvements

Once you have improved your EPC rating, don't foget your Landlord Insurance.