Update: In September 2023, the government made an announcement that they are parking the new EPC regulations on Landlords.
If you’re a landlord and looking for help to provide greener and more cost-effective energy to your properties, then let us explain why you should be considering upgrading your portfolio.
According to government proposals, buy-to-let properties will need to be upgraded to an EPC Rating of C
Buy-to-let properties lawfully require an EPC rating of E when rented to tenants.
The government began a consultation on raising this minimum requirement for privately rented homes back in 2020. All forming part of the government’s commitment to achieving net zero by 2050 and striving to improve the energy efficiency of the worst inefficient homes.
The government proposal outlined that from 2025 all properties will need to be upgraded to an EPC rating of C and above.
This complies with new tenants renting the property.
For dwellings with existing tenants, the cut-off date is 2028.
However, the government has been criticised for not yet turning these proposals into legislation. Delays in legislating these new landlord energy efficiency standards could potentially impact tenants living in cold leaky homes and cause private landlords to feel confused about their obligations.
Energy efficiency must be a key priority for landlords
Given the government’s commitment to achieving net zero by 2050, it is more than likely that the new standards will come into effect. Even though the proposals have not yet passed through Parliament and have not been officially passed as legislation, landlords are encouraged to future-proof their rental properties and prepare.
Landlords have a few years to start thinking about how to make these upgrades.
This means that landlords with existing tenancies have a window to upgrade their portfolio and spread the cost over that period.
If the properties have new or recent tenants, then it needs to be upgraded by 2025.
The cost for improvements is looking to be capped at £10,000 and when you reach this figure you will need to ask for an exemption.
Keeping records of all improvements and associated costs will be required when applying for an exemption.
How can landlords afford to upgrade their properties in such a small window of time?
It’s reported that over 60% of properties in England and Wales fall into the D Rating for energy performance. You can check your properties here:
Taking property from D-C can require some simple methods, however, landlords may have a more costly pursuit when taking property from E to C rating. Also, the number of tenancies in the portfolio will ultimately decide the best method to approach this.
The good news is that 2023 is probably the best time to start conversations with an energy consultant.
The government is pushing hard to reduce the country’s carbon footprint and there are suitable funding streams that landlords can take advantage of while they’re still available.
We are going to talk through some of the grants available to landlords and their tenants at the moment, which if you qualify, will go a long way to helping with those energy-efficiency home improvements.
Grants open to Landlords
Free insulation for homes in Council Tax Bands A – D
Private Landlords may be able to take advantage of a free insulation scheme, known as the Connected for Warmth Scheme. Tenants, private landlords, and owner occupiers living in homes in Council Tax Bands A to D can benefit from fully funded cavity wall, loft insulation, smart heating controls, and LED-efficient lightbulbs.
The Great British Insulation Scheme
The Great British Insulation Scheme, formally known as the ECO Plus Scheme, has been in development for a while now and but has recently featured in the government’s ‘Powering Up Britain’ net zero plans. This scheme is expected to be available later in 2023.
The government has made available £1 billion pounds over the next three years to deliver insulation improvements to homes with an EPC rating of D or below. Unlike the Energy Company Obligation Scheme (ECO4), private tenants and owner occupiers don’t have to be on qualifying benefits. Being able to take advantage of the Great British Insulation Scheme depends on the EPC rating of your home, as well as the Council Tax Band the home falls under – A to D in this case.
Unlike the Connected for Warmth insulation-led scheme, households are expected to be required to contribute towards the cost (on average it is believed to be on average 10% of the grant).
Energy Company Obligation (ECO) Grant
The ECO funding scheme is now in its fourth iteration with a primary focus on improving a property’s EPC rating.
Tenants in privately rented properties can apply for these grants providing they meet the criteria.
The range of measures includes combined energy-saving installations such as Solar PV, cavity wall and loft insulation, external and Internal wall insulation, and air source heat pumps.
If the tenanted properties fall into an EPC rating of E or D then it will be open to more measures that could include renewable appliances to help lower the cost of energy bills.
The boiler upgrade scheme for landlords
Landlords can apply for the Boiler Upgrade Scheme to help decrease the carbon footprint of a property.
The Boiler Upgrade Scheme (BUS) is a government-backed scheme that provides upfront capital grants to support the installation of heat pumps and biomass boilers in homes in England and Wales. The scheme looks to incentivise households to move away from fossil fuel boilers to low-carbon alternatives.
Acting on behalf of property owners, installers can apply for:
- £5000 off the cost and installation of an air source heat pump
- £5000 off the cost and installation of a biomass boiler
- £6000 off the cost and installation of a ground source heat pump, including water source heat pumps
This scheme is part of the government’s wider commitment to decarbonise heat in buildings and reduce emissions by 80% by 2050.
Recently, in March 2023 in the government’s net zero strategies ‘Powering up Britain’ publication, it has been announced that the BUS scheme has been extended, which means the scheme no longer ends in 2025 but has been extended to 2028. Great news for Landlords looking to upgrade existing tenanted properties.
The Government has also introduced 0% VAT on materials and installation so be sure to check quotes provided by heat pump installers. This should reduce the price significantly.
Combined with 0% VAT and 0% Interest, this could be the most likely step for most landlords.
New combination boilers with a ten-year warranty on parts and labour are pretty common these days and with a new thermostat and TRV, this could make a significant difference.
Combine this with loft and cavity insulation and you’re certainly on the way to retaining the heat. However, the one measure that will take you into the C bracket after installing the other measures is solar.
What measure would be recommended to improve an EPC Rating?
Nothing is set in stone until you get an up-to-date EPC and possibly a correct survey. Most Energy Performance Certificates have an assumed description.
So for example; the assessor may not have access to a suspended floor, so it will be assumed that this is uninsulated depending on the age of the property.
Semi-detached house with an EPC Rating of E
As an example, let’s use a fictitious semi-detached home with a loft conversion and extension.
It has an uninsulated suspended floor, solid brick extension and cavity wall. A relatively new boiler but radiators that are over 10 years old.
How could we take this from E to D?
- Insulating the walls would help save £395 per year*
- Insulation of the suspended floor would help save £110 per year*
- New or smart heating controls would save around £22 per year*
- Low-energy lighting will save another £15 per bulb per year*
How could we take the property from EPC E to C?
This requires the introduction of renewable tech. So, it’s suggested that you combine all of the above with Solar PV.
*based on Energy Saving Trust (EST) saving estimates and information provided by https://find-energy-certificate.service.gov.uk/
If you’re a landlord and would like more information on how you can upgrade your property portfolio, please contact a member of our team to help you understand the options available to you.