Minimum EPC Rating in Rental Properties Set to be Raised

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Raising the

Minimum RPC

The government has now reintroduced that landlords must meet improved energy efficiency standards for rental properties by 2030. Under the proposal, all private landlords in England and Wales will be required to achieve an Energy Performance Certificate (EPC) rating of C or higher by the end of 2030, a significant increase from the current minimum of EPC E.

The government predicts that these changes could help renters save an average of £240 annually on their energy bills. To support landlords in meeting these new standards, a maximum spending cap of £15,000 will be put in place, beyond which landlords will not be required to invest further. In cases where renters pay lower rents or the property is in a lower council tax band, this cap could be reduced to £10,000.

Landlords Already Focused on

Bettering EPCs

Previous targets were in place by the Tories, that all rental properties in the UK must achieve a minimum EPC rating of E. Unless there are exceptions such as the landlord having spent £3,500, which is the maximum budget, on upgrading their property.

The step to introduce the legislation stating that all rental properties on new tenancies must hit the required level of C to be legally let, was later abandoned. However, many landlords had already been making improvements to the energy efficiency of their properties.

This included upgrading existing properties, such as by fitting double glazing or draught proofing rooms. It also involved selling off older, less energy-efficient assets and in some individuals investing in new-build homes, which are some the most energy-efficient housing due to being built to meet new legislations.

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Attracting More Tenants to

Rental Properties

Tenants have said EPC ratings are a key concern when they are considering where to rent, and the upcoming legislation isn’t the only reason. This is due to the rising cost of living, soaring energy bills, and a higher level of concern and awareness towards the environment. Renters tend to look for properties with better EPCs as the bills could be reduced and to the carbon emissions will also be lower.

Therefore, landlords looking to stay ahead of the market and offer the most desirable accommodation to tenants have either already invested, or have plans to invest, in more energy-efficient property. Many investors look at investing in areas of regeneration aiming to make the city more sustainable, or look to invest in off-plan properties to ensure the latest, eco friendly appliances and designs are used.

There are multiple surveys that back this up, such as one by Paragon Bank in April, the results revealed that almost 37% of portfolio landlords are continuing to upgrade their rental properties to achieve EPC ratings of C or above despite the changing targets.

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Mortgage Lenders Are Now Taking EPC Ratings into Consideration

Some lenders are now taking into account EPC ratings when making lending decisions. This is due to the impact on the environment of less sustainable homes. Therefore, this is something investors looking to purchase a property with a mortgage should consider. If a property EPC is below what a lender may expect with little room to improve it, an application is at risk of being rejected.