Looming EPC deadline asks too much of landlords, according to the Housing Secretary
The Government is “asking too much too quickly” of landlords. Levelling Up and Housing Secretary Michael Gove admitted yesterday indicating he plans to “relax” the looming EPC deadline.
Landlords will be barred from letting properties from 2028. Unless they achieve an Energy Performance Certificate (EPC) rating of C under new eco-rules. Those who fail face a £30,000 fine as part of the Government’s push to achieve Net Zero by 2050. But there are fears the deadline is unattainable.
Retrofitting rentals to a rating of C or above typically involves significant works such as secondary glazing, wall insulation, draught-proofing, heat pumps and solar panels. Many landlords remain reluctant to commit to these steps due to the significant costs. The displacement of tenants during works and fears that insulating, draught-proofing and secondary glazing could cause condensation, mould and poor air quality.
“My own strong view is that we’re asking too much too quickly,” Gove told the Telegraph. “We do want to move towards greater energy efficiency. But just at this point, when landlords face so much, I think we should relax the pace that’s been set for people in the private rented sector, particularly. Because many of them are currently facing a big capital outlay in order to improve that efficiency.”
Gove will today announce his bid to tackle the housing crisis, which will form a key part of the Conservative pitch at the next election.
There are 5 million private rental properties across England and Wales. Around two thirds have an EPC rating below C which means 3.4 million properties across the country have yet to hit the target.
The situation is slightly better in London where 41% of rental properties (around 424,260 homes) have an EPC rating of C or above. However, the size of London’s rental market means it would cost a whopping £4.7 billion to upgrade the remaining 59%.
The scale of the problem
Two in three landlords could be forced to sell up in the next five years because they are unable or unwilling to hit the target, according to a survey by the Mortgage Advice Bureau. There are also concerns that landlords who do manage to upgrade properties will pass the costs on to tenants already paying sky-high rents caused by a shortage in rental properties and increased cost pressures on landlords.
Another issue deterring landlords from embarking on retrofit projects is uncertainty about whether the bill that contains the new regulations will actually become law. Currently the Minimum Energy Performance of Buildings Bill is only at second reading stage in the House of Commons with the next debate scheduled for 24 November 2023. It originally stated that all new tenancies must achieve EPC C by 2025 but the Government extended the deadline to 2028 over fears it would force landlords to sell worsening the rental crisis.
There are fears a nationwide deadline could result in a rush of landlords trying to upgrade at the same time with prices skyrocketing due to labour shortages.
Source: UK Parliament
What is an EPC?
An EPC is the main measure used in Britain to assess how much a home costs to heat and light. Properties are rated from A to G with A being most energy efficient. At the moment, it is a legal requirement for let properties to have a minimum EPC rating of E certified within the last ten years.
The EPC certificate is a short document with coloured bars representing the seven energy efficiency levels (A to G) and two green arrows: one showing the property’s current rating and the other showing its potential rating. Below the chart is a breakdown of the features of the property that led to its score. For instance, whether it has secondary glazing or wall insulation.
The certificate then provides suggestions about how to improve the property’s performance, such as low energy lighting, draught-proofing, internal or external wall insulation, heat pumps and solar panels. The document estimates the yearly energy costs for the property and the potential saving if the suggested changes are made.
An “imperfect” indicator
There is considerable skepticism about whether EPCs are fit for purpose with reports of identical properties achieving different ratings or scores worsening rather than improving after the installation of secondary glazing or wall insulation.
Experts warn that one problem is that scores are often based on guesswork. An energy assessor visits a property and feeds its features into software which estimates energy usage. The trouble is an assessor cannot always tell whether a wall is insulated so reports will often say: “No insulation (assumed).” If the assumption is wrong, the property will achieve a lower rating than it should.