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UK government's U-turn on EPC requirements
21st Sep 2023
The UK government has just made the surprising decision to reverse its previous plan of mandating landlords to upgrade their rental properties' energy efficiency to at least a C rating on the Energy Performance Certificate (EPC) by 2025 and 2028. The response to this decision has been mixed, with some people welcoming it, as a means of easing the financial burden on both landlords and tenants. Others have criticised it, stating that it will hinder the UK's progress towards achieving its net zero targets and make energy security more challenging to attain.
What caused this U-Turn?
The government has provided several explanations for its reversal on the EPC requirements. One reason is the estimated cost of upgrading all rental properties to a C rating, which would amount to around £13 billion. This expense would ultimately be passed on to tenants in the form of higher rent.
Another reason is the government's concern over the impact of the EPC requirements on landlords. It fears that these requirements may prompt some landlords to sell their properties, which would lead to a decrease in the supply of rental housing and further rent increases.
Additionally, the government has expressed its desire to adopt a more "pragmatic" approach to improving energy efficiency in the private rented sector. It argues that the EPC requirements were too inflexible and did not take into consideration the unique circumstances of landlords and tenants.
How does it affect you?
As a landlord, the recent U-turn in policy means that you are no longer mandated by law to improve the energy efficiency of your rental properties. Nonetheless, the government is still actively encouraging landlords to make these upgrades and is offering various financial incentives to do so.
For tenants, the U-turn means that landlords are no longer obligated to invest in energy efficiency improvements for their properties. However, some landlords may still choose to make these upgrades to enhance the appeal of their properties to potential tenants and to lower their energy costs.
What happens next?
As a landlord, it's important to weigh the pros and cons of upgrading the energy efficiency of your rental properties. Factors like the condition and age of your properties, the type of tenants you have, and the cost of improvements should all be taken into consideration.
We are taking steps to help landlords make cost-effective, impactful improvements to their properties to increase their energy efficiency, whilst also working to a budget. If you'd like to explore your options for increasing the energy efficiency of your properties, our team are on hand to help give you the right advice at the right price.
What is the Government planning to do now?
Encourage landlords to upgrade the energy efficiency of their properties where they can, but scrap the policies that force them to do so.
Raise the grant for upgrading boilers to low-carbon alternatives to £7,500, a 50% increase, to assist households.
Extend the deadline to ban oil, LPG, and coal heating for off-gas-grid homes from 2026 to 2035 to avoid expensive upgrades costing homeowners £10-15,000 within three years, as many homes are not compatible with heat pumps.
Set exemptions to the planned 2035 phase-out of fossil fuel boilers, including gas, assisting those who will struggle the most to make the switch to low-carbon alternatives. This is expected to cover around a fifth of homes, including off-gas-grid homes, where the cost of retrofitting will be too high a price to pay.
Regardless of legislation and regulation, we are here for you. While you may not need to hit that EPC threshold now, u-turns on decisions can never be ruled out, even u-turns on u-turns. You may still want to get ahead of the curve and start making your properties more efficient. You can get in touch with our team at 01452 235 034 to find out more and book your pre-report 📞
Sources:
PM speech on Net Zero: 20 September 2023
Eco U-turn Welcomed … but private rental sector still needs a plan
