With the UK aiming for net zero by 2050, energy efficiency is at the forefront of many minds in the property industry. To this end, the sector must achieve a minimum EPC rating of C across all residential buildings by the year 2035.
But what exactly are EPC ratings? How do you achieve a C rating – and what will the costs be? In this article, the auctioneers at Property Solvers explore everything that goes into an Energy Performance Certificate (EPC).
We’ll also explain the benefits of energy efficient properties from the perspective of the landlord and the tenant, as well as the UK government and the future of the planet.
EPC Rating C Meaning
In order to have an EPC of “C”, a property must have between 69 and 80 points on the Standard Assessment Procedure (SAP).
This is a government-stipulated measure used by local energy assessors to judge a property’s energy efficiency.
How is Energy Performance Measured?
An assessor will grant SAP points by measuring various elements. These include carbon emissions, wall / roof insulation, double glazing, boiler performance / central heating, lighting and other factors like the presence of solar panels.
An Energy Performance Certificate (EPC) is the official way of recording the energy efficiency of buildings resulting from such installations. The more energy efficient a property, the higher its EPC rating (and often its value).
As shown below, A is the highest band and G is the lowest…
Current EPC Requirements
There is currently no minimum EPC rating required when selling a property.
However, all new tenancies must have an energy efficiency rating is E or above. The same goes for existing tenancies upon renewal. You therefore cannot let a property with an F or a G energy rating.
Future EPC Requirements
The minimum energy rating for rental properties, however, is due to change.
The rules state that by the end of December 2028, all properties accepting new tenancies across England and Wales must achieve a rating of EPC C or above “where practical, cost-effective and affordable.
The Secretary of State will define what is “practical”, “cost-effective” and “affordable”. We will update this post when there is more clarity in this regard.
Note that this deadline was originally set for December 2025 – but extended due to what many suspect were unrealistic expectations.
All existing tenancies must also achieve a C rating by the end of December 2028.
By 2035, rental properties and homeowners’ (owner-occupied) properties must fall within the C band of energy efficiency.
The law states that the landlord or property owner must make these changes unless they can prove that they are exempt from the rules (see below).
What is My Current EPC?
Arranging an energy certificate report is often the best way for property owners and landlords to find out their current EPCs.
A report of this kind may cost between £35 – 120, depending on the size of your property and its location. It will help you to understand how a building is currently performing. It will also show what you should change to achieve a higher rating. EPCs last for 10 years.
Note that you will have to have a valid EPC in place before listing your property with an estate agency or via an auctioneer.
How to Achieve an EPC C Rating
To meet the requirements of the government’s bill, your required actions are likely to vary. This is because they will be based on the existing features of the property.
In most cases, it’s worth organising for an assessor to conduct an initial EPC certification to gauge what needs to be done. Most assessors will provide some tips on the best and most cost-effective ways to improve the property energy performance.
How to Improve EPC Rating from E to C
There are a number of ways in which homeowners and landlords may improve the level of their Energy Performance Certificates.
For example, you may be able to gain enough SAP points by installing:
- New energy efficient lighting
- Improved wall insulation and roof insulation
- A more efficient heating system
- Double glazing – or, if you already have this, triple glazing. In listed buildings (where there may be restrictions), secondary glazing is a good option
- Less wasteful domestic appliances
- Solar panels or other features that utilise renewable energy
- Draught proof doors and windows – and other methods to prevent heat egress
How Expensive Will it Be?
These required EPC improvements are likely to prove a challenge, both for those who are currently working as landlords and for those seeking their first buy to let property.
In particular, many of the improvements required come with a hefty bill.
EPC Rating C Cost
Much will depend on the property’s age and size, but we would estimate that the average cost for landlords to improve their EPC from the current minimum of E to C will be in the region of £17,000. Meanwhile, landlords who need to raise their buildings’ performance from G to C will face costs of almost £27,000 on average.
EPC Rating C – Cost Per Month (UK)
At the time of writing, an E to C upgrade for a typical existing tenancy will cost an average of approximately £470 per month to be completed in time. A G to C will cost around £750 per month.
This means that a significant number of buy to let landlords and owners of rented accommodation simply won’t have the money to adhere to the new government regulations.
All properties across England and Wales must have an EPC Certificate. By 2028, every Private Rented Sector (PRS) property must have a minimum energy rating of C.
Many landlords who are concerned that they will not be able to afford the necessary changes. As a result, they may feel that selling their property is the only option.
However, it could be possible to argue for an exemption…
Possible EPC Upgrade Exemptions
According to gov.uk, your application for an exemption could be considered valid if:
- You can show quotes from three separate installers revealing that “the cost of purchasing and installing the cheapest recommended improvement exceeds £3,500 (including VAT)”. You must also provide confirmation that you are “satisfied that the measure(s) exceed this amount”. This is known as a ‘High cost’ Exemption and applies only to domestic property;
- For non-domestic properties, you can show that “the cost of purchasing and installing a recommended improvement or improvements does not meet a simple 7-year payback test”. In this test, “the expected value of savings on energy bills that the measure (or package of measures) is expected to achieve over a period of 7 years, starting with the date the installation is completed, are less than the cost of repaying it”;
- You have already made all of the changes that could have been proposed in order to meet the regulations, and yet the property has still not achieved the desired rating.
- You can prove that a proposed wall or ceiling insulation system would be unsuitable for your building;
- The required improvements to the house in question require the consent of a third party, which has been refused;
- A RICS-qualified surveyor has informed you that any adjustments to the house – including changing the boiler, heating system, insulation or anything else – will reduce the buildings’ value;
- You have only started letting out rented property very recently (in which case, you may be granted a 6 month exemption).
Most exemptions will only last for five years. You will then need to take further steps to increase the energy efficiency of your property.
Why Upgrade Your EPC?
C level EPCs may also benefit you as a landlord or property owner. Upon making energy efficiency improvements to your building, you may find that it:
- Costs less money to run and heat – this would have beneficial effects on HMO, serviced accommodation and rent-to-rent projects
- Commands a higher asking price when sold
- Attract a better quality of tenant (willing to pay a higher premium)
- Enables buyers to achieve a lower mortgage rate (should you decide to sell)
- Lowers your property’s carbon footprint, decreasing its emissions and contributing less to climate change
In order to meet the UK government’s regulations and to play your part reducing the UK’s carbon footprint, unless you are exempt, you’ll need to aim for an EPC of C by 2025 if you are planning to launch new tenancies, or 2028 if you run existing rental properties.
As result, how these new rules will play out for the property investment sector in reality remains to be seen. We’re certainly not expecting the roll out to be plain sailing.
For many landlords, this may be a justifiable reason to exit the buy-to-let space (through selling). Many have indeed become frustrated with the plethora of regulations over the last decade or so.
However – if you can afford to do so – making these investments will ultimately result better financial and environmental dividends overall.