13:41 PM, 17th March 2023, About 6 days ago 35
This Property118 investigation looks at how much energy performance certificates (EPCs) could cost the PRS and whether EPCs save tenants money or whether they are simply a green tax.
A recent report by The Times revealed the staggering inaccuracy of the certificates used to rate the energy efficiency of homes.
It highlighted research conducted by technology company CarbonLaces that shows EPCs overestimate energy use by an astonishing 344%.
The study found the lower EPC rating, the bigger the overestimation. For properties with the worst rating of G, the EPC estimates these properties use 656kWh/m2/yr. Yet their smart meters show they use only 151kWh/m2/ per year – a 344% gap.
The study compared the EPCs of more than 17,000 homes with their actual use, as logged by smart meters.
The research revealed that the average metered gas and electricity use for all properties was 125kwh per square metre a year – 91% lower than indicated by EPCs.
Though the plans have not been made into law, ministers have previously proposed that by April 2025, newly rented properties in England and Wales will need to meet a minimum EPC standard of C – tougher than the current E standard. The regulation is also slated to apply to existing tenancies from 2028.
Findings from Foundation Homes Loans revealed 66% of landlords said they were aware and understood the plans, 25% said they did not understand the details, and 9% were not aware at all.
A consultation on new EPC and minimum energy efficiency standards (MEES) requirements ended two years ago.
The government has given no response to it, leading to widespread uncertainty in the PRS about what is expected from landlords.
Rodney Townson, from landlord association group iHowz has been writing to ministers since 2021 urging them to publish the new EPC and MEES requirements for the PRS.
He warns there is a danger for landlords making improvements to their property to meet current EPC standards, only to find the work won’t meet the new EPC standards when they are finally published.
He said: “Taking out electric heating to replace with gas is good for the current EPC mechanism (gas is cheaper to run than electric), but almost certainly will be wrong for the new EPC (gas produces more carbon than electric).
“As a result, many landlords are reluctant to carry out anything beyond draft proofing and window/door replacement.”
Since 2008, all rental properties in England and Wales have required an EPC. The certificate gives detailed information about the property’s energy efficiency and carbon emissions.
To receive an EPC, you must have an Energy Assessment Survey carried out at your property which costs £70.
The areas the inspector will assess include:
Based on data from lender Octane Capital, an estimated 1.6 million of England’s 4.9 million PRS homes are C or above. This means that 3.4 million homes are below C and need to be upgraded.
Calculations from mortgage broker Habito on the cost of upgrading homes from D to C are roughly as follows:
Averaged out, this puts the cost of an upgrade at roughly £7,466. Multiplying this by 3.4 million homes and there is a total cost across England of an eye-watering £25 billion.
What’s more, this is only a conservative figure, as it is based on merely an upgrade from D to C, leaving out the E to G properties.
A cross-party group of MPs and peers has suggested that landlords who don’t upgrade their properties should be liable for mortgage penalties.
The All-Party Group on a Green New Deal believes there should be a 1% mortgage interest rate premium levied on all buy-to-let properties with an EPC below C which would be fully refundable if the standard were reached within three years.
Mr Townson of iHowz said of the proposals by the all-party group: “The government is still to publish the requirements of the new EPC, and of the new MEES.
“We cannot accept landlords being penalised for not meeting their proposed energy saving requirements until the government confirms their requirements for landlords.”
Under current government regulations, landlords are not expected to spend more than £3,500 on upgrades to meet the current EPC requirements for a rating of E.
However, proposed changes could see all rental properties requiring an EPC rating of C by 2028, and a potential increase of this cap to £10,000, meaning landlords could be required to spend more just to meet minimum requirements.
Landlords and agents have called on the government to provide more financial support for the PRS to meet EPC targets.
In 2022, Propertymark wrote to the Department for Business, Energy and Industrial Strategy calling for a package of financial and taxation incentives to support landlords to get their properties up to EPC targets.
Some of the incentives included:
In the written submission, the industry body said: “Our primary concern is that many landlords will exit the sector with the supply of PRS housing being further constricted and housing options for predominately the most vulnerable being reduced.
“The cost of up to £10,000 will be challenging for all types of landlords especially those with small portfolios and those landlords with properties with low house price values.”
Mick Roberts, a landlord from Nottingham, told Property118: “Many landlords have spent thousands of pounds upgrading homes and we don’t even know what’s what yet due to the uncertainty around the new EPC targets.”
He said a lot of properties may need £30,000 spending on them just to get to band C.
“I’ve got to start telling tenants soon, ‘You can’t live here past 2028, the government say you can’t if the property is not a C, and your rent doesn’t pay for a C’.”
Matt Copeland, head of policy at National Energy Action, said: “There has never been a more important time to upgrade the energy efficiency of our housing stock.
“It is crucial that private renters, who are more likely to be in the deepest fuel poverty, aren’t left behind.”
The campaign group would like tax exemptions to help landlords make the required adjustments to their properties to help meet EPC standards.
Mr Copeland added: “While tighter minimum standards and larger cost caps need to be part of this, it’s important that these come with complementary measures such as tax exemptions and interest free loans to help a landlord make the required adjustments.”
It’s not just landlords who are struggling with EPCs, many tenants are also facing the burden.
In a report from BBC’s East Midlands Today, an 80-year-old disabled woman is being evicted from her home of 62 years due to her property not passing new EPC standards.
Thoresby Estate ,which owns Anne Marsh’s property in Nottinghamshire, said it is no longer viable to rent out and has given her two months to move out.
Anne told the programme: “I’ve been here 62 years, why do I want to go anywhere else?”
A spokesman for Thoresby Estate told the programme it deeply regretted the situation, but new energy performance certificate rules make it no longer viable to rent out houses like Anne’s.
In reality, while EPCs may look good on paper, the entire system seems to be broken, with a big disconnect between grades and a property’s actual energy requirements.
Landlords across the country will face having to pay thousands of pounds just to upgrade their properties and many will be left questioning whether it is worth it. And the big worry for tenants is that many of those landlords will not think it is worth the outlay and leave the PRS – and the tenant having to find somewhere else to live.
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Chris @ Possession Friend
15:09 PM, 17th March 2023, About 6 days ago
Nothing more than a WEF Net-Zero ' con '
15:10 PM, 17th March 2023, About 6 days ago
Due to the conventions within which Domestic Energy Assessors (DEA) are required to produce the EPC, some properties are rated lower than reality which is not the fault of the DEA. Which was not a big issue prior to introduction of MEES but now that SAP rating is being used as a rod it is understandable that some landlords are being forced to sell up and evict good tenants.
15:13 PM, 17th March 2023, About 6 days ago
There is absolutely no point in government attempting to change the EPC requirements until they have sorted out the EPC rating system so that it supports rather than conflicts with their long-term objectives, which include phasing out gas and oil fired central heating in favour of who knows what.
The worst possible result would be for them to be pressured into coming out with a half baked plan that will achieve little benefit and cost everyone a fortune.
15:22 PM, 17th March 2023, About 6 days ago
Reply to the comment left by Seething Landlord at 17/03/2023 - 15:13
.... which is probably exactly what they'll do!
15:51 PM, 17th March 2023, About 6 days ago
Anything which the government does - left or right wing is a total con - its driven by idealistic civil servants who do not have a clue about life - most have never lived in the real world and are driven by lunatic ideas - its where clause 24 came from in 2015, it is so obvious that it was going to reduce housing stock and push up rents a child in a primary school could have worked that one out the government was told time and time again - its now come home to roost, the civil service is where all the green nonsense comes from - we all need to be more economic - its called common sense - its not knew but successive governments and civil servants have renamed everything in the name of green agendas - they have discovered its rather a clever way of creating money through green taxes - the more extreme you can be the more you generate what a great idea - very little is thought through - I have been a landlord for many years - very few prospective tenants look at the EPC many do not have a clue if you draw the rate to their attention. EPC ratings account for very little its even more crazy when you have a couple of EPC's for a single property, originally a D now a C and nothing has needed to be done to uplift the rating - its all over the place and the tenant and landlord are left picking up some of the costs and for what?? to reach idealistic targets put in place by ministers who decided to read a scientific paper without realising what the hell they were reading!! - enough of my rant . You won't change the current crowd or system without major change in the political system.
15:59 PM, 17th March 2023, About 6 days ago
I am sure it states (in current EPC regs) that an exemption can be registered if consent for works is not achieved from the freeholder/owner. In that case if I can't achieve a C without some small and inexpensive measures, then I shall be looking down this route as some of our properties are not owned in just one name. If one owner objects then what can the other one do? 😉
16:01 PM, 17th March 2023, About 6 days ago
Reply to the comment left by Happy Landlord at 17/03/2023 - 15:51"......a child in a primary school could have worked that one out the government was told time and time again.......”
because it was deliberate!! Let that sink in "deliberate "!!!!!!
Now ask why did they introduce this (and the two dozen or so other anti-Landlord measures) & what their 'real' agenda is?
Chris @ Possession Friend
16:06 PM, 17th March 2023, About 6 days ago
Reply to the comment left by DSR at 17/03/2023 - 15:59
Problem is, Govt have defined ' inexpensive ' for landlords, as TEN Grand !!!
16:18 PM, 17th March 2023, About 6 days ago
Reply to the comment left by Chris @ Possession Friend at 17/03/2023 - 16:06
The gvt are also keen on making sure that we LL's use government registered contractors to carry out this work from what I understand. They are going to add £££'s to their bill as they have probably been charged a wadge to get certified in the first place - so they are just passing on their costs. Plus there is a shortage of labour anyway so even securing staff is going to prove expensive...again costs will be passed on.
Result - most of the bigger upgrades are going to be well over the £10k so as far as I understand it, you can claim exemption. If the bill is £12k for external insulation for example you can't just pay for 10k's worth!
Again all hear say...nothing concrete still.....
16:20 PM, 17th March 2023, About 6 days ago
They certainly hammer Landlords when the Judge won't let u evict a tenant cause u din't get the tenant the EPC years ago. What has that got to do with the price of cheese? A technicality excuse that then means the next 100 not so perfect tenants can't get a house.
This mortgage thing already happening with cheaper deals. Again more expensive rents if the tenant was getting cheap rent.
All my tenants will object. I had one last week refuse £6000 of FREE ECO 4 work cause her house already thin & nicely decorated. It's her home, Govt are forgetting this & thinking we charging top whack rent & don't get on with our tenants.