If you’re a new landlord, you probably have plenty of policies and regulations to get your head around. Read on to ensure you fully understand Energy Performance Certificates (EPCs) and their implications for landlords before you start renting out your property.
Legal Obligations for Landlords
An EPC is non-negotiable if you plan to rent out a property. In fact, you risk a £200 fine if you don’t make this document available to your tenants. This document should be provided free of charge. Your property’s EPC rating should also be featured in any materials used to advertise it.
This isn’t your only legal obligation as a landlord: you must also ensure that any property you let has a rating of at least E on the A-G scale. Otherwise, you could be charged a hefty fine of £4000. This standard applies to new and pre-existing lease agreements.
Tenants also have the legal right to request improvements in relation to energy efficiency. However, landlords are not responsible for investing in these changes. If requested, tenants would have to personally fund them.
How to Obtain an EPC
To obtain the commercial EPC required to rent out your property, you’ll have to contact a commercial energy assessor. This process should be undertaken before you start advertising your property so the results can be published on promotional materials.
Make sure you approach the right commercial energy assessor for your property type. If your property has advanced features not commonly found in domestic properties, like a large-scale heating system, you will need an assessor who specialises in complex properties.
There is no fixed price for a commercial EPC; however, most prices fall into the range of £45-£100 plus VAT. Because different companies offer commercial EPC assessments, prices vary. Landlords might find it useful to shop around for the best price before contracting a particular company to provide their EPC.
Once your property has an EPC certificate, this lasts 10 years. Note that you require one valid certificate for every property you rent out.
Understanding Your Rating
An assessor will attend your property to inspect it. This is a non-invasive inspection that will evaluate how your home is heated, how it is lit, and how it consumes electricity. Suggestions will also be made regarding how you can improve your rating.
Technically, you can’t “fail” an EPC. Your property will be rated somewhere between A and G: A is the best and G is the worst. However, to rent your home legally, you need to score at least E. The assessor will assign points to your property up to a maximum of 100. An E score requires 39 points.
The average energy rating for a home in England and Wales is a D. Newer homes have usually been built with efficiency in mind, so they tend to score higher than older constructions.
Improving Your Rating
If you scored lower than an E, you’ll have to make some improvements to the energy efficiency of your property before you can advertise it to tenants. We recommend the following steps:
1. Installing wall insulation. Cavity walls, for example, should be filled.
2. Insulating the roof. Without this, heat can escape easily from your property.
3. Buying a new boiler. Newer models tend to be more energy efficient. Investing in a new boiler could make a big difference to your EPC rating.
4. Changing to energy-efficient lightbulbs. This is probably the easiest and most affordable change you can make.
Of course, home improvements like these cost a significant amount of money. You should think of these costs as necessary start-up expenses for your business. Legally, you have no choice but to make these changes if you wish to rent the property.
Benefits of an Improved EPC Rating
Besides the fact that a higher rating will permit you to rent out your property, there are other advantages to an improved EPC rating. For example, government research has shown that greater energy efficiency levels could actually increase your property’s value by up to 38%.
You may also benefit from lower mortgage rates. Green mortgages are being offered by lenders at favourable rates as an incentive for property owners to increase the energy efficiency of their properties.
Because heating and electricity bills are reduced in properties that are energy-efficient, you might find that your tenants choose to stay there longer. Lower turnover rates are good news for landlords!