Written by Lisa Proffitt | 3rd October 2023
Following months of concern from landlords about expensive energy efficiency upgrades to properties, Prime Minister Rishi Sunak has scrapped plans to enforce minimum EPCs. The changes were due by 2025 and would have required all properties covered by a new tenancy agreement to meet a minimum EPC rating of C, with all rental properties due to meet the standard from 2028.
So what does determine a property’s EPC rating and what is their significance for homeowners and landlords now?
An EPC provides detailed information about a property's energy consumption, energy expenses, and recommendations for reducing energy usage and saving money. These ratings use a scale ranging from 'A' (most energy-efficient) to 'G' (least energy-efficient). An EPC is made up of two figures: an energy-efficiency rating and an environmental impact rating. The energy-efficiency rating gauges a property's overall efficiency. The environmental impact rating measures the property's contribution to carbon dioxide emissions.
Many factors determine an energy efficiency rating, including the property’s design, quality of insulation, heating system and the use of renewable technologies. The potential for making energy-saving improvements is also considered. A Domestic Energy Assessor (DEA) looks at the property's dimensions, construction materials, heating systems and lighting, and then uses the data to calculate the ratings.
EPCs are mandatory whenever a property is built, sold, or rented. For potential buyers or tenants, an EPC provides a valuable insight into the energy efficiency of the property and estimates potential heating and lighting expenses. Consequently, EPC ratings play a key role in the decision-making process for buyers and tenants.
We must reduce carbon emissions to combat climate change. Buildings add significantly to carbon emissions, making a property with a high energy efficiency rating crucial in reducing environmental impact. Energy efficiency also means cost savings due to lower energy bills, especially important in a cost of living crisis. Additionally, well-insulated homes with efficient heating systems offer a more comfortable living environment, with fewer drafts and consistent temperatures. For landlords, energy-efficient properties are often more attractive to prospective tenants and can command higher rents.
In the UK, properties with higher energy efficiency ratings (A-B) generally have higher market values compared to those with lower ratings (F-G). This even has a term attached to it – “the green premium” and highlights the growing importance that buyers and investors attach to energy efficiency. Making energy efficient improvements, such as better insulation, energy-efficient appliances, or upgraded heating systems, can elevate a property's EPC rating and, in turn, its market value.
Properties with poor energy efficiency may experience a negative impact on their value. Aside from increased energy costs, these properties may prove more challenging to sell or rent due to the rising demand for energy-efficient homes.
If you are buying, renting or selling a property and would like any more information on EPC ratings, we would be delighted to show you our properties and offer relevant advice. Please call us now to talk to one of our property experts, or book a free market appraisal on our website today.
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