Will the latest changes to EPC standards affect your ability to sell or rent a property?
Thousands of UK homes could soon be unsellable - not because of their location or layout, but because of their energy rating.
This possibility comes from the UK government announcing proposed changes to the Minimum Energy Efficiency Standards (MEES), which are based on the Energy Efficiency Rating (EER) of an Energy Performance Certificate (EPC).
Bit of a mouthful right? Well, don’t worry because we’re here to clear everything up. We’ll explain exactly what the proposed changes are, what they mean for your ability to sell or rent your property, which parts of the UK will be most affected, and how you can improve your home’s energy efficiency.
We’ve used EPC Open Data to back up our findings in this article, which is a resource showing the EPC ratings of almost every property in the UK.
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Key Stats:
56% of all UK homes have an EPC rating of D or below.
This means 10.6 million houses, 2.9 million flats, 1.7 million bungalows, and 370,000 maisonettes would need to make energy efficiency improvements in order to pass the new MEES.
The new minimum EPC rating for rented properties will be ‘C’.
Landlords could need to spend £15,000 every 10 years improving their properties (up from the current cap of £3,500).
Wales currently has the highest percentage of rented properties with EPC ratings of ‘D’ or lower.
England has the highest number of listed buildings, which will be much more difficult to bring up to the proposed changes to the MEES.
Almost all homes built since 2012 already have EPC ratings of ‘C’ or higher.
What are the Proposed Changes?
Firstly, the UK government wants to raise the minimum EPC rating from ‘D’ to ‘C’, which it argues is integral to helping the country reach net-zero emissions by 2050. With homes responsible for around 20% of the UK’s total greenhouse gas (GHG) emissions, the government argues a shift in the way buildings use energy needs to happen.
A home’s EPC rating is a measure of how efficient or inefficient it is, and this is rated on a scale from A (most efficient) to G (least efficient) for domestic buildings and A+ to G for non-domestic buildings.
It also plans to reform how the MEES are determined, which comes as a direct result of the proposed changes to EPCs. Basically, it’s going to be more difficult for homes to meet the MEES, which will affect landlords renting property, and homeowners looking to sell.
How Will This Affect Landlords?
Landlords in the domestic private rental sector (PRS) will have to make sure their properties meet ‘C’ for new tenants by 2028, and 2030 for existing tenancies. Right now, landlords must spend £3,500 (including VAT) every five years to make sure their properties meet a minimum EPC rating of ‘E’.
Under the latest MEES proposals from the UK government, this cost cap will increase to £15,000, but the cost cap exemption has been increased to 10 years.
In short, every 10 years, landlords will be required to spend the new cost cap on improvements to their properties to reach the minimum EPC rating of ‘C’.
Some organisations representing landlords have suggested the cost cap be adjusted based on the rental income of a property. For example, the cost cap should decrease to £10,000 if a property’s rental income falls below a certain threshold.
How Will This Affect Homesellers?
The changes in the MEES won’t legally impact the ability to sell a home, but it’ll make selling a home more difficult, as most homebuyers probably won’t want an inefficient home. Also, for prospective landlords looking to buy property, the changes to the MEES will mean they likely won’t want to buy a property that doesn’t meet the soon-to-be required EPC minimum rating of ‘C’.
Region-by-region Breakdown
England
Over 60% of all homes in England are rated ‘D’ or below in terms of efficiency, which means millions of homes will find themselves shy of the proposed changes to the MEES. For both homeowners and landlords in England, expensive home improvements are almost definitely round the corner.
For the private rental sector (PRS), around 42% of properties fall below ‘D’ in their EPC ratings. This leaves millions of PRS households in need of energy efficiency improvements within the next few years.
England also has the highest number of listed buildings (around 350,000) and properties in conservation areas, which are typically much harder to upgrade (more on that below). Specifically, the South West of England contains 24% of the entirety of the UK’s listed buildings.
That’s a lot of history for sure, but a real headache when it comes to upgrading these buildings to be more energy efficient. Considering that the age of a property is the biggest single factor in energy efficiency (according to the ONS), England’s greater proportion of historic buildings is a big challenge for it to overcome.
Wales
More than 68% of homes in Wales have EPC ratings of ‘D’ or below, so there’s a good deal of work to be done here to get them up to scratch. Of the 33.5% of rental properties, roughly 67% of these have EPC ratings below ‘C’, which is going to mean a lot of landlords in Wales will need to prepare for expensive energy efficiency improvements.
Scotland
A total of 44% of homes in Scotland are rated ‘D’ or lower according to existing EPC standards. 41% of properties rated ‘D’ or lower are rented properties, and while currently Scotland has no MEES that landlords have to meet, the Scottish government is considering aligning with the rest of the UK on new MEES standards.
Northern Ireland
46% of homes in Northern Ireland currently have EPC ratings of ‘D’ or lower. Rented properties tend to be more efficient overall, but the median energy score for PRS households is still only 61, so this leaves hundreds of thousands of properties in need of energy efficiency improvements.
Why Are These Homes So Hard to Upgrade?
By far the hardest homes to upgrade will be listed properties and buildings in conservation areas. Their status as buildings of national importance makes adding insulation or technology such as solar panels either illegal or nigh-on impossible.
Historic buildings are also typically much more expensive to retrofit with energy efficiency upgrades, which is another barrier for homeowners and landlords at a time where the cost of living is so high.
Another trend we noticed when analysing the figures from the EPC dataset was that detached properties across all of the UK were more likely to have a lower EPC rating than every other property type (including semi-detached, terraced, flats, and maisonettes). Detached properties are generally more difficult to upgrade because of factors including:
Larger surface area. Detached homes have greater surface areas, meaning more heat can escape – and the nature of detached homes means heat can escape on all sides of the property. Homeowners typically need to spend a lot more on insulation.
More space to heat. You’ll need a bigger heating system to keep a detached home warm during the colder months, so you’ll almost certainly be spending more on fuel.
While statistically, people living in detached homes have higher incomes, the cost to bring EPC ratings to ‘C’ or higher is considerably higher. Mortgage provider Habito found that a large detached house would need to spend an average of £12,540 to upgrade from a ‘D’ rating to a ‘C’ rating.
For a smaller, mid-terrace house, the cost is around £6,400 and it’s even less for a one-bedroom flat – £3,653.
What This Means for Sellers
The proposal to increase the MEES means sellers face the real prospect of having mortgages refused, especially if the property has little room to meet recommended efficiency improvements.
This is the same for buy-to-let mortgages, as you won’t be able to rent a property out unless it meets the MEES (which will be an EPC rating of ‘C’ or above from 2028 onwards for new tenants).
Additionally, it’s likely homes unable to improve their EPC rating will have a reduced sale price.
It’s not all doom and gloom though as honestly, most buildings will be able to make at least some improvements to their EPC ratings (even listed properties).
As we mention below, getting a new boiler for example, can increase a property’s EPC rating by as much as 40 points. For some homes, this can mean jumping up several EPC bands, and that might just be enough to meet the proposed minimum EPC rating of ‘C’.
Something else to consider is getting your home reassessed for a new EPC rating. You might’ve already made a bunch of improvements to your home (such as getting a new boiler or improving your insulation), and wouldn’t it be nice to have all that validated?
How to Improve Your EPC Rating
It might sound daunting to improve your EPC rating, but there are a fair few easy steps you can take to bump up your score pretty quickly. Let’s go over a few of the easiest ways:
Get Energy Efficient Lighting
A quick and easy way to add a few points to your EPC rating is by replacing your old light bulbs with more efficient LED ones. Sure, LED bulbs are initially a little more expensive, but they’ll last so much longer – 1,200 hours for a typical 60-watt incandescent bulb, versus around 60,000 hours for LED bulbs.
LED bulbs use roughly 75% less energy than incandescent bulbs, so you’ll save money in the long run with them too.
Insulate Your Pipes and Hot Water Tank
If you use a hot water tank, you should definitely get a jacket for it. No, not a fancy winter coat, but the principle is the same – keeping heat in.
Get a hot water jacket that’s between 60mm and 80mm thick, which’ll only cost you around £25. You’ll have paid this back and started making a profit within the first year – pretty good right?
Insulating your pipes is equally cheap, and though you’ll only save a few quid per year, it’s still definitely worth doing.
Replace Your Old Boiler
This might not quite count as the easiest way to improve your EPC rating, but it’s certainly one of the most effective. In fact, getting a new boiler can add around 40 points to your overall score – potentially even more if your old boiler is particularly inefficient.
Modern condensing boilers are your best bet, but if you can, consider looking into heat pumps as they’ll have the edge in increasing your EPC score. Heat pumps are expensive, though you might be able to get up to £7,500 towards the cost of one with the government’s Boiler Upgrade Scheme (BUS).
Get a Smart Meter
Smart meters are worth it, trust us. Getting one won’t directly improve your EPC rating, but it’ll tell you exact information about your energy usage, and you can use that knowledge to make informed decisions about improving your energy efficiency.
Read more:
For a more detailed guide, check out our article on how to improve your EPC rating (from E to C).
Ready to Improve Your EPC Rating?
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