Energy Performance Certificates: a guide for landlords and tenants

A raft of legislation has been introduced over recent years aimed at raising environmental standards for properties in the private rented sector.

Currently all privately rented homes must have an Energy Performance Certificate (EPC) of at least band E and landlords face fines of between £500 and £5,000 if their property fails to meet the grade - although changes may well be on the way following the end of a recent government consultation.

EPCs are used to benchmark the energy efficiency of our homes, with all properties that are let or sold given a rating from A (the most energy efficient) to G (the least). They also provide information about the property's typical energy costs and recommendations on how to save money.

In some cases landlords may be eligible to apply for financial help to improve the environmental credentials of their property. An example is the Green Homes Grant, through which landlords can apply for vouchers up to the value of £5,000 to cover up to two-thirds of the cost of specified home improvements

The scheme has now been extended to 2022 and in order to qualify households must install a so-called 'primary' measure of either insulation (such as loft or cavity wall) or low carbon heating.

Only then are secondary measures such as draught proofing, double glazing and smart thermostats eligible for subsidy. The cost of these secondary measures cannot be more than the cost of the primary measures and the voucher must be redeemed and improvements completed by 31 March 2022.

Where financial support is not available landlords are expected to spend up to £3,500 inclusive of VAT to bring their homes up to standard. However, if the suggested improvements cost more, then they may be able to register for an exemption.

Other exemptions include if the work will devalue the property by 5 per cent or more, the recommended work has been carried out but the rating has not improved, the mortgage lender will not approve the recommended upgrades or the building is listed and the upgrades would 'unacceptably alter' the property's character or appearance.

Tenants can also ask a landlord's permission to carry our energy efficiency improvements. While the landlord cannot unreasonably refuse, it is the responsibility of the tenant to ensure the works are funded.

Once the work is complete an accredited assessor must evaluate the property and produce the new EPC.

Further details of how the Government plans to improve the environmental credentials of the private rented sector are expected to be revealed in the spring. In the meantime, our gallery here includes a selection of energy efficient properties that more than meet the current standard.

Further information

Contact Alex Lee

Contact Savills Residential Lettings