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EPC Ratings: Landlords May Be Given Until 2028 to Meet Net Zero Targets

Net zero targets - EPC ratings

Speculation is growing that the government is considering a revised 2028 deadline for landlords to meet tough new net zero targets – with lettings bans and fines of up to £30,000 for those who fail to comply.

Under previous proposals that would force many landlords to shell out thousands of pounds on energy efficiency improvements, all new rentals would be required to achieve minimum C Energy Performance Certificate (EPC) ratings by 2025, with a later 2028 deadline applying for existing tenancies.

But after repeatedly failing to respond to a consultation on the subject, it has been reported this week in The Telegraph that the government is considering extending the EPC deadline for all rental properties to 2028 – three years later than originally proposed.

EPC Ratings – What Landlords Need to Know

Energy Performance Certificates (EPCs) are a way of measuring the energy performance of a building on a scale from A to G, ranging from the most to the least efficient. 

As part of measures to improve the energy efficiency of properties throughout England and Wales, the Energy Efficiency (Private Rented Property) Regulations set out a minimum standard for domestic private rented properties. Since 2020, or 2018 for new tenancies, all rental properties must achieve an EPC rating of E or higher before being let out to tenants.

But landlords are now braced for a tightening of the rules requiring properties to achieve a minimum C rating – something that BEIS estimates could cost £4,700 on average, although likely to be significantly higher in many cases.

Landlords failing to comply could receive fines of up to £30,000 and face bans on letting properties.

In 2020, the government launched a consultation on the subject but has been repeatedly criticised for failing to respond, leaving landlords in the lurch over exactly what they will be required to do.

Last month during a debate in the House of Lords on the Energy and Climate Intelligence Unit Report, Lord Foster of Bath urged the government to provide landlords with clarity:

“How much longer must landlords wait to know exactly what the Government want them to do to improve the energy efficiency of the privately rented sector?”

Speculation that the deadline for energy efficiency upgrades will be pushed back to 2028 comes after the NRLA warned that the sector had zero chance of upgrading every property within the original proposed timeframe.

It is thought landlords will be given another five years to meet net zero targets – but no official announcement has yet been made.

What Do Landlords Need to Do?

While it is understood there will be a cap on the maximum amount landlords will need to spend on upgrading an individual property, they would still be expected to fork out thousands of pounds on improvements – thought to be capped at £10,000 if reports are true.

For those purchasing a new buy-to-let, it’s important to carefully check the EPC rating of any potential purchase and factor in the cost of energy efficiency upgrades to meet future requirements. For properties falling below standard, this is likely to include, but not limited to, things such as insulation, heat pumps and solar panels.

Existing landlords should check their EPC certificate and keep a close eye on further developments so that they can plan ahead for new regulations, including schemes that may help with the cost of upgrades.

If a property cannot be feasibly updated, now might be the time to sell. Keep in mind that properties with poor EPC ratings may be less desirable and harder to offload in the future.

Ultimately, now is a tough time for landlords – but that doesn’t mean there aren’t many other lucrative opportunities in the market. With the soaring cost of mortgages, increased taxation and burdensome legislation all squeezing buy-to-let profits and forcing many out entirely, landlords may consider alternative investments that can be made without the drawbacks of being a landlord.

For more information on property investment in 2023, don’t hesitate to give our team a call on +44 (0)1708 922 222 – or fill in our contact form to request a callback. 

Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.