EPC rating ‘C’ deadline approaching for BTL landlords

Understanding the EPC ‘C’ Deadline

The EPC ‘C’ deadline marks a dramatic change in rules for the UK’s private rented sector. It will improve energy efficiency in homes while contributing to wider environmental objectives. For landlords, this standard is no longer a choice but a tactical imperative to stay compliant and avoid being fined.

1. The Proposed Date

The government has explained a phased timeline for the EPC ‘C’ deadline. New tenancy agreements must meet the standard by 2025 and existing tenancies by 2028. By 2030, every private rented property in England and Wales will have to achieve this rating. These deadlines show the need for action on energy inefficiency without compromising landlords.

Plan early because upgrading properties can be logistically and financially difficult. For example, procuring vetted contractors to carry out insulation upgrades or boiler replacements can take months. In addition, government reviews or consultations could revise the timeline, adding an element of uncertainty. Keep yourself educated to avoid leaving yourself short at the final hour.

2. New Tenancies

From 2025, properties with new tenancies will need an EPC ‘C’. This legislation means landlords must place energy efficiency at the forefront before renting to new tenants. For landlords, that means extra consideration when getting properties ready to re-lease or for new contracts.

This policy is in line with the government’s wider energy efficiency objectives, decreasing carbon emissions and enhancing housing sustainability. Less efficient properties might need improvements like loft insulation, double glazing, or energy-efficient heating systems. Landlords should concentrate their efforts on properties likely to have turnover soon.

3. All Tenancies

By 2028, all rental properties must achieve a minimum EPC ‘C’, even if they are not subject to rent. This universal standard drives sector-wide improvement and addresses the historical inefficiencies of older housing stock.

Long-term planning is important for landlords, particularly those with a portfolio. Improvements could be cavity wall insulation or upgrading to more energy efficient appliances. With compliance mandatory, the private rented sector is expected to shift towards higher quality and more energy efficient homes.

4. The Current Rules

For now, rental properties must have at least an EPC rating of ‘E’. Fines can be up to £5,000 per property for non-compliance. There are exemptions for certain scenarios, such as properties where upgrades go beyond the £3,500 cap.

Landlords need to be aware that works carried out since October 2017 count toward this cap. While the current threshold is lower, moving to ‘C’ will require more invasive upgrades.

5. Why the Delay?

Economic issues and the magnitude of the upgrades needed mean the EPC ‘C’ deadline is postponed. At this rate, the target might not be reached until 2042, well behind the 2030 target.

While balancing feasibility with ambition, the government proceeds with discussions with stakeholders to fine-tune policy. Funding upgrades and supply chain constraints are among the challenges. For landlords, gradual deadlines provide an opportunity to adjust, but urgent action is still necessary.

Why This Matters Now

The impending EPC Band C deadline is a tipping point for private landlords. With the UK government tightening up regulations to meet climate targets, landlords are under pressure to move. Breach these and there may be fines, reputational damage, and even legal ramifications.

Rising Energy Bills

Energy efficiency is no longer a nice-to-have; it’s a must-have. With energy bills on the increase, renters are increasingly searching for homes where utility bills can be kept to a minimum. An energy-efficient home decreases energy bills and gives you an advantage in the rental market. For example, replacing insulation or fitting double-glazed windows can considerably reduce heating costs, which benefits both landlords and tenants.

The financial impact for landlords failing to take steps to improve energy efficiency is hefty. Places with cheaper running costs are more appealing to tenants, meaning lower vacancy rates. Improving energy efficiency helps tackle fuel poverty, an increasingly prominent issue in the UK. Approximately 2.9 million rental properties need upgrades. Delays could result in logistical headaches and higher prices as demand for contractors and materials surges.

Tenant Expectations

What does this matter now? Hitting the EPC Band C standard caters to these preferences and increases tenant retention and satisfaction. A more energy-efficient property not only attracts environmentally-minded tenants, it creates longer tenancies, meaning that void periods are reduced.

Properties that aren’t up to EPC standards could find it hard in a competitive market. Tenants are more inclined to select properties that offer reduced energy bills and better standards of living. Keeping in line with these expectations helps landlords stay relevant in a changing rental market.

Government Targets

The government’s pledge to decarbonise further emphasises the need to act. The EPC Band C requirement is part of wider attempts to reduce emissions to Net Zero by 2050. Landlords are key to this transition by retrofitting housing stock to lower emissions.

There are serious ramifications for non-compliance including up to £30,000 in fines. More punitive legislation might follow if national targets aren’t hit, putting landlords under increased strain. Acting early minimises risk and bolsters the UK’s sustainability ambitions.

Your Landlord Action Plan

The impending EPC rating C deadline for buy-to-let properties emphasises the need for landlords to act. Breaching these energy efficiency standards could lead to hefty fines or loss of rental income. A systematised approach is needed to comply and leverage the advantages of property upgrades.

Assess Your Portfolio

1. Review your property portfolio “Start by checking the current EPC ratings for each property to find the ones that are Band C or below. Undertake upgrades on the worst properties and non-compliant work below EPC E first. Targeting these properties not only guarantees you are compliant but may save you money and delight your tenants.

Professional energy assessments are highly recommended to pinpoint specific areas requiring improvement. For instance, a qualified assessor might identify poorly insulated loft spaces or inefficient boilers as key issues. These evaluations provide a clear roadmap for upgrades and help landlords understand the scale of work needed.

Budget for Upgrades

Having a budget dedicated to compliance is key. Begin by getting a detailed quote for possible upgrades, such as insulation, double glazing, or replacing outdated heat sources. The government has capped the costs of energy efficiency upgrades at £3,500 plus VAT. Landlords will need to pay for any upgrades needed on top of that. If third-party funding, like ECO schemes or Green Deal finance, pays less than £3,500, then landlords are supposed to make up the shortfall.

Think long-term return on investment. Eco-friendly buildings typically receive higher rents, more tenants and less maintenance in the long run. Keep an eye out for financial help, whether green mortgages or grants from a local authority.

Schedule the Work

Once you’ve established the scope and budget, formulate a detailed timeline for upgrades. Get contractors and surveyors on board early, as demand may spike closer to the deadline. Build in a margin for delays, such as supply chain issues, to ensure you’re not stuck at the last minute.

Prioritise the improvements that deliver the biggest energy efficiency returns. Swapping out an ancient boiler could make a bigger difference than small tweaks to insulation. This assures compliance and property value increases.

Common Upgrades for a ‘C’

How to upgrade a property’s EPC rating to a ‘C’ Landlords should target the worst areas of energy loss, invest in long-term solutions, and utilise grants or funding. Below are key improvements to consider:

• Install or insulate the loft and wall to reduce heat loss.

• Upgrade boilers or consider low-carbon heating options.

• Replace single-glazed windows with double or triple glazing.

• Switch to energy-efficient lighting, such as LED bulbs.

Loft Insulation

Loft insulation tends to be the cheapest energy efficiency upgrade. Shoddy loft insulation is a leading heat leaker, with up to a quarter of heat lost through the attic roof. Adding or upgrading insulation retains warmth in the home, lowering energy consumption and bills. Installation usually costs £400 to £500 for most, easily within the £3,500 limit. The upgrade can dramatically increase an EPC rating, especially for older properties. Landlords may even be eligible for grants through the Energy Company Obligation (ECO) or local authorities, making it more affordable.

Wall Insulation

Cavity wall insulation is recommended for houses built after the 1920s, whereas solid walls suit older homes. Good insulation can prevent up to 35% of heat loss, leading to significant savings on heating costs. Cavity wall insulation costs about £800, but solid wall solutions can be over £7,000, so budget carefully. Both surfaces make for a solid ‘C’. Landlords should check for planning permissions, especially on listed or conservation-area properties.

Boiler Upgrades

Old boilers waste energy. Modern condensing boilers or low-carbon alternatives like heat pumps are more effective. Boiler Upgrade Scheme (BUS) grants of up to £7500 help to subsidise heat pump installation, too. The initial investment may be significant, but contemporary systems reduce energy bills and EPC ratings.

Glazing Improvements

Double or even triple-glazing will cut out both heat loss and outside noise. Double-glazing is a common upgrade for a ‘C’. Replacing them can reduce invoices by about £235 each year and substantially enhance ratings. Houses with draughty or badly-sealed windows should make this upgrade their top priority.

Low-Energy Lighting

Switching to LEDs is a simple upgrade. LEDs use up to 90% less energy than traditional bulbs, reducing electricity consumption and improving EPC ratings. They’re cheap, plentiful, and simple to fit. Replacing old bulbs throughout a property costs less than £100, the ideal quick win for landlords in the £3,500 limit.

Navigating the Costs

How to navigate the costs Bringing properties up to code can be pricey. Planning ahead and knowing what help is available can ease the pain. We take a look at five top areas to help landlords manage these costs.

The £10,000 Cap

• There’s an energy efficiency improvement cap of £10,000 per property, meaning landlords aren’t obligated to spend more than this to comply.

• If you put your money into cost-effective upgrades, such as loft insulation costing between £1,000 and £2,000 or boiler upgrades costing between £2,500 and £4,000, you will get the best return on investment.

• Landlords can claim exemptions if they are paying more than £10,000 for improvements on their properties. However, landlords will need to prove costs to request it.

• Keeping detailed expenditure logs of all upgrades is key to providing the proof needed to evidence compliance and avoid sanctions.

Available Grants

• Grants such as the Energy Company Obligation (ECO), Green Deal finance, and local authority schemes can reduce costs.

• Qualifications usually depend on factors such as property type, tenant income or the level of improvement needed.

• Grant use can ease a heavy burden, particularly for expensive measures such as wall insulation, which can cost up to £10,000, or solar panels, which can cost between £6,000 and £10,000.

• Local authorities sometimes provide funding too, so it is worth checking out regional initiatives.

Green Mortgages

Green mortgages provide an effective funding mechanism for upgrades, with financial incentives to boot. Many lenders offer cheaper rates on energy-efficient homes, so these products appeal to landlords. Refinancing by way of green mortgages can create the funds for upgrades such as double glazing costing between £5,000 and £12,000 or air source heat pumps costing between £7,000 and £15,000. Speaking to specialist lenders is an important way of maximising these advantages.

The Cost of Inaction

Postponing upgrades means higher future costs when tougher regulations become applicable. Proactive compliance protects future income and tenant happiness.

Beyond Compliance: A Savvy View

Hitting the EPC rating C deadline is more than regulatory boxing. For British private landlords (PRS), it’s an opportunity to improve property portfolios, meet sustainability targets and realise better profits. With around 2.9 million rental properties needing to be upgraded, taking a strategic approach to improving energy efficiency will be vital.

Future-Proofing

Energy efficiency upgrades are no longer a choice. They are essential in keeping ahead of changing regulations. The current EPC rating C minimum could lead to more stringent targets in the future, so it’s crucial for landlords to be ahead of the curve. Ready properties today will not only ensure compliance, but mitigate the risk of costly fines of upwards of £30,000 per property.

Sustainable upgrades, like putting in modern insulation or renewables-ready heating, reduce environmental risks. Compliance fits with the UK’s net zero aspirations, potentially removing 4.5 million tonnes of CO2 emissions per year across England and Wales. Seeing these upgrades as investments for the future may see landlords future-proof their portfolios against changing market environments.

Attracting Tenants

Energy-efficient homes are more attractive than ever to tenants, especially as energy bills spiral. Upgrading homes to EPC C can save tenants £284 a year on energy bills. This is a huge selling point in a tight market. Promoting these savings in property ads can make listings appealing, particularly in parts of the North of England and Wales where inefficient homes are prevalent.

Energy-efficient properties often deliver greater comfort and reliability, boosting tenant satisfaction and retention levels. A healthy, energy-efficient home that appeals to tenants can lead to long-term stable tenancies, cutting turnover costs for landlords.

Increasing Value

Improving a property’s energy performance can greatly increase its market value and rental yields. Sustainable homes appeal to eco-conscious tenants and buyers. For landlords, this presents a chance to charge more rent while helping to decarbonise the housing market.

While upgrade costs are variable, especially geographically, the long-term gains usually far outweigh the upfront outlay. For example, while bills in the North East and Wales may amount to 80% of yearly rent, in London, they comprise just 26%. These upgrades are a financial upside, especially as energy-efficient homes could be the way of the future.