Persons operating leases and rental properties in the England are in a close race against time to make necessary improvements to their energy efficiency at these locations by 2025. This is based on newly implemented legislation by the Government. The changes are set to affect the Minimum Energy Efficiency Standard or ‘MEES’ Regulation which effects the minimum performance leeway that is required for income generating at the locations.
LandlordBuyer have delved into a recent survey which showed that approximately 40% of homes in England are currently rated an EPC (energy performance rated) of C or above.
Given the newly implemented legislation, rental locations that currently has an EPC base rating below ‘C’ as of 2025 will no longer be qualified to do business as lettable locations. At the moment, the lowest rating requirement by properties is an ‘E’ rating.
An allowance has however been granted for now to owners of domestic properties that have the current base rating of ‘E’ or above to continue renting the location, as long as the resident and the arrangement was instituted before the 2025 implementation date. Overall, the incoming changes are expected to be gradually implemented beginning with new contracts with tenants from 2025 and eventually taking in all rental arrangements in 2028.
Is it better to sell or improve the EPC rating?
Almost a half or 40% of potential property seekers see the EPC rating as an important factor in purchasing property. Improvement in energy efficiency and other items has shown that desirability has increased up to 20% among paying occupants and even buyers.
With a potential increase in locations joining the rental market a large number of current owners may push to get rid of their existing spaces rather than make the government required improvements.
If the idea carries through there is likely to be a reduction in available rental properties that may invariably lead to increased renting costs which will be a positive income turnover for renters that already meet the EPC C+ rating requirement.
Cost consideration for changes
There is an existing “Cost Cap” for upgrades to properties as under the new government legislation a property owner will not be required to use more than £3,500 on energy use improvements. The average cost however thus far has been estimated at £8,900.
How do I get to an EPC rating of C?
The first thing is to engage with an EPC assessor for an inspection that will provide a report on current EPC value, recommendations for improvements, their related impact on rating and payback period. It is always good to have a current EPC reading especially if other upgrades were done since the last one was issued. The new EPC will allow for a chartered building surveyor to make recommendations on work and other related costs to bring the building up to code.
