Energy has been a hot topic throughout 2022, with ever-increasing energy bills and climate change at the forefront of our minds. Energy Performance Certificates (EPCs) were introduced in 2007 and now apply to both private domestic properties and commercial properties. They’re designed to support the Government in achieving its Net Zero Carbon targets.
The EPC regulations are due to be overhauled from 2025. Take a look at how the changes may impact you.
What is an Energy Performance Certificate?
An Energy Performance Certificate (EPC) is produced after a qualified EPC assessor has completed an assessment of a property’s energy efficiency and is valid for 10 years. In its most basic form, an EPC contains an energy efficiency rating from A to G, with A indicating the most energy efficient and G indicating the least energy efficient.
The EPC surveyor looks at various factors including the loss of energy through the windows and the efficiency of boilers, heating systems and insulation. Following the EPC survey, the assessor will also provide a list of recommendations to improve the property’s energy efficiency.
EPCs are valuable documents as they give prospective buyers or tenants an indication of how much their energy bills are likely to be.
Is an EPC Legally Required?
An EPC has been a legally required document when selling, letting or building a property since 1st October 2008.
For domestic properties, the seller or landlord is required to obtain a Domestic Energy Performance Certificate. The Domestic EPC provides an overall energy rating, an environmental impact rating and an indication of potential ratings.
In the case of commercial properties, such as offices or factories, the property owner or landlord must obtain a Commercial Energy Performance Certificate. The Commercial EPC is a more in-depth assessment than the Domestic EPC.
Both the Domestic EPC and the Commercial EPC will include a list of measures to improve the property’s energy efficiency.
Can You Be Fined for Not Having an EPC?
Failure to acquire a valid EPC when you sell, build or rent out a property can result in financial penalties.
In the case of domestic private rented properties, a Local Authority may serve a financial penalty up to 18 months after the breach and/or record the breach in the Private Rented Sector (PRS) Exemptions Register. Fines range from £1,000-£4,000 per property and breach, depending on the violation. A cap is applied of £5,000 per property.
If you fail to have a valid EPC at the time of selling your private domestic property, you may face fines of up to £5000.
For commercial properties, failing to have a valid EPC or to present it to prospective tenants or buyers can carry a fine of £500-£5,000.
What Makes a Property Exempt From an EPC?
There are certain circumstances that mean a property does not require an EPC.
All domestic properties let, sold, or modified in the past 10 years are required to have an EPC, so there are no exemptions.
However, there are a number of criteria which can allow you to rent out your domestic rental even if it has an EPC rating below E, such as the “high cost” exemption. This applies if it will cost more than £3,500 to make the necessary minimum improvements to bolster the EPC rating.
Commercial property can be exempt from the requirement to have an EPC. Reasons for an exemption include:
- The property is listed or officially protected, and the minimum energy improvements would unacceptably alter the building.
- A temporary building to be used for 2 years or less.
- A place of worship or building for other religious activities.
- Industrial sites, workshops or non-residential agricultural buildings that don’t use much energy.
- A detached building with less than 50 square metres of floor space.
- A building that is due to be demolished, with all relevant planning and conservation consents.
What Will the New Regulations Be in 2025?
New EPC Regulations will be introduced in 2025, which include:
- A property can only be let if it has an EPC rating of C or above;
- Expansion of the existing PRS Exemptions Register to a private sector property compliance and exemptions database;
- Increase the maximum fine for a breach of EPC regulations from £5,000 to £30,000; and
- The current cap on investments that landlords must make to install energy-efficient measures will rise from £3,500 to £10,000.
The revised regulations will apply to all new tenancies from 2025, and to any existing tenancies from 2028.
The EPC regulation changes are due to start taking effect in 2025 and go further to support the Government’s environmental and climate goals.
With the ongoing threat of rising energy bills, now is a good time to take a look at any recommendations to improve the energy efficiency of your properties, such as loft insulation, installing a cavity wall or upgrading your windows to double or triple glazing. It may well save you money in the long term.