When privately renting a property, a landlord has the obligation to provide the tenant with a copy of the Energy Performance Certificate (“EPC”) stating how energy efficient the property is. The ratings run from “A” as the most efficient down to “G” as the least efficient.
In what some landlords will see as another blow, the EPC requirements for privately rented property is set to change with the Minimum Energy Performance of Buildings (No.2) Bill currently working its way through Parliament. This proposes an increase to the minimum rating that a property may have if it is to be privately let.
Currently a privately rented property must have a rating of no less than “E”. If the Bill is passed and becomes an Act then this “E” rating will continue for properties under a tenancy that commences prior to the change over date 2025, but all properties with new tenancies from the change over date will have an EPC rating of no less than “C”.
If passed then the change over date is set for 2025, though the exact date will not be confirmed until if/when the Bill is passed.
But the changes do not stop there! It is also proposed that the need to have a minimum EPC rating of “C” will then apply to all properties that are privately rented from 2028 (again, the exact date will not be confirmed until if/when the Bill is passed).
So what does this mean for landlords?
This means that if the Bill passes then landlords that will be renting properties out in 2025, and possibly entering into new tenancies at this time, will need to ensure that they have made the necessary modifications to their property to raise the ratings to no less than the minimum, and obtained a new EPC certificate to confirm this.
As 2025 is now only a few years away, and depending on how long it takes for the Bill to become an Act the amount of time given to landlords to prepare may be reduced even further, for some properties to bring the EPC rating up, this will require some investment. Landlords should be looking at what will be necessary to prepare their properties to meet the requirements if/when they are passed.
We recommend that this is done even if you have a long term tenant in the property and do not plan to enter into a new tenancy during 2025; if the Bill passes and your tenant unexpectedly leaves during 2025 and you need to find a new tenant you will have to make sure the property has the right EPC rating before letting the same.
This could not only prove expensive to do all in one go rather than spreading the cost over the next few years, but also you will be unable to rent the property in the meantime and could lose out on valuable if not vital income.
Now the “doom and gloom” in this article may never actually come to fruition. The Bill may never pass or the requirements could be changed, or even have the dates for implementation pushed further back. Notwithstanding this, it is our recommendation to landlords that enquiries about what may be required to upgrade their properties should be made now.
Conversely, given the increase in energy prices, there is also the possibility that the Bill could pass and the requirements could be brought in even sooner. They could even do away with the 2028 date and make it applicable to all properties from 2025. Under such circumstances a prudent landlord should already be aware of their potential financial commitment and be ready to protect themselves.