Understanding Energy Performance for your rental property

We share all you need to know about energy efficiency as a landlord due to the current climate of escalating energy costs.

Published under Lettings and Our blog — Feb 2024
Understanding Energy Performance for your rental property

In the current climate of escalating energy costs, it’s increasingly important to consider the energy efficiency of rental properties. According to Energy Saving Trust, with annual energy bills for a typical dual-fuel direct debit household in Great Britain projected to be approximately £1,928 between January and March 2024, a £94 increase from the previous three-month price cap.

Landlords have an opportunity to implement energy efficiency upgrades, particularly during the summer months in preparation for the colder seasons and potential future energy price hikes. This in turn will improve a tenant’s affordability for their monthly rental payments, as their utility bills will be more affordable, and taking into consideration that the average rent has increased in the last year.

In this guide, we explore how landlords can improve the energy efficiency of their rental properties and align with the Government’s Minimum Energy Efficiency Standards.

Energy Performance Certificates (EPCs)* are an essential starting point for both landlords and tenants to understand the current energy performance of a property. They provide a rating from A (most efficient) to G (least efficient), with landlords legally required to obtain a new EPC every ten years and ensure that tenants receive a valid copy upon moving in. An attractive EPC rating not only leads to lower energy bills for tenants but also reduces the property's carbon footprint, making your property more appealing and sustainable.

Current and Upcoming EPC Requirements

Rental properties in Great Britain must have an EPC, with a minimum rating of 'E' for let in England and Wales.

Looking ahead, while the UK Government has delayed the proposal of all rental properties requiring an EPC rating of 'C' or above for new tenancies and all existing tenancies, with potential penalties of up to £30,000 for non-compliance, this has not been abolished. Although there is no confirmed date of when this proposal may return, it is very likely that it will return with more robust EPC assessment parameters, improved timescales, and government support through grants, so this provides a good opportunity to continue to invest in property improvements, especially those improving energy efficiency.

Conducting Energy Assessments

To obtain an updated EPC, landlords need to consult with an approved domestic energy assessor. If your property is managed by Hamptons we will arrange the EPC and take care of notifying your tenant, we can follow up with quoting any works required.

Implementing Energy Improvements

Once you have an up-to-date EPC, landlords should review the recommendations and consider improvements. In England and Wales, up to £3,500 may be required to be spent on improvements to meet the Minimum Energy Efficiency Standards, with the possibility of applying for a high-cost exemption if the costs exceed this amount. There are various tools and grants available to assist in assessing and funding these upgrades, such as the Simple Energy Advice's energy efficiency calculator and home energy grants.

Typical energy-saving measures include insulation, efficient heating systems, draught-proofing, double glazing, and renewable energy systems. Smaller steps like upgrading to LED light bulbs and installing smart meters also contribute to energy conservation.

Exemptions and Next Steps

While most properties will benefit from energy efficiency improvements, some may qualify for exemptions due to various reasons like affordability issues or structural impediments. Landlords should register any valid exemptions on the PRS Exemptions Register, with exemptions lasting for five years.

In conclusion, enhancing the energy efficiency of rental properties is not only beneficial for the environment but also for the comfort and financial well-being of tenants. Landlords are encouraged to take advantage of the warmer months to make these improvements, ensuring their properties are well-positioned to meet and exceed the evolving Minimum Energy Efficiency Standards, as well as maintaining the property’s best possible condition and market value.

*Some exemptions may apply, like listed buildings. Speak to your local lettings experts before completing an EPC.

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