It’s been found that energy performance certificates, or EPC
are “inaccurate” and that recommended energy efficiency upgrades make little to
no difference in reducing energy bills. Rated on a scale of A-G, very few
residential or commercial properties score top marks, but EPCs are still a
legal requirement when you are building, buying, renting or selling
property.
It’s been reported that EPC ratings overestimate energy usage by a huge 344%, but their requirement poses issues for landlords and homeowners who are looking to sell, rent or buy. There are a lot of discussions in the industry about whether or not EPC ratings are accurate, or even relevant, any more. They can cause a lot of extra headaches for landlords and owners, impacting everything from rental yield to insurance. With that in mind, let’s take a look at how accurate EPC ratings are and what the future looks to hold for them.
What Are EPC Ratings?
EPCs work on a traffic light system which shows how
energy-efficient a property is. Rated on a scale between A - G, the higher the
rating, then the lower the energy bills are predicted to be for that property.
An EPC is required by law whenever a property is sold, rented or being built
and, in Scottish properties, the certificate needs to be displayed somewhere
within the property. This is typically within the meter cupboard or on/next to
the boiler.
An EPC helps to give information about the use of energy within the property and how much this can impact utility bills. Following an EPC certification being carried out, recommendations will usually be given on what can be done to improve the rating to save money.
What Is The Average Home’s EPC Rating?
New research has shown that only 41% of homes in the UK meet
the recommended EPC score of ‘C’ or above in 2023 - up just 1% from the
previous year. The government has recently put forward a bill which will
require all rental properties in the UK to meet a compulsory EPC score of grade
C or above by 2025 - which means that there is a lot of work still to be
done.
The small 1% year-on-year increase indicates just how much
landlords may be struggling to implement the recommended improvements following
an EPC rating, or perhaps how expensive the changes are to integrate, without
much in terms of a return.
Although changing to different light bulbs and adding some
extra loft insulation can have some small impacts, the larger and more costly
suggestions include improving double glazing, solar roof panels and heat pumps.
Not only are these expensive, but they can be incredibly disruptive to install
and, in some cases, may require the tenants to leave the home temporarily,
which can cause a decrease in rent that month.
Although under the current government regulations, landlords aren’t expected to spend over £3,500 on improvements to meet the current requirements of an EPC rating of E. This could increase to £10,000 by 2028 with the proposed changes to regulation, where landlords will need to meet a minimum C grade.
Are EPC Ratings Accurate?
One of the key findings from recent studies is that some occupants of properties that had ratings of F and G, on average, consumed less energy than those with a higher grade. This shows the importance of being able to accurately measure and understand the behaviour of occupants within properties.
With fuel and energy costs continuing to rise, more people are having to change their energy consumption, so may be using alternative energy sources which don’t come under the EPC ratings. Also, data which is collected within EPC ratings doesn’t include non-regulated energy data, such as cooking appliances, so the data could be misconstrued in this way.
In some of the studies, it was also found that houses which were rated EPC grades of A and B, which are deemed to be more energy efficient, had higher energy consumption than predicted. There were some suggestions that this could be down to better insulation and things such as solar panels within these homes, which can change occupants' living habits.
What Can Landlords Do About EPC Ratings?
Landlords legally can’t rent out properties which score a
grade below an E, so it is important that if landlords know that their
property scores below this, they make the improvements required to increase the
grade. You also can’t list or sell a property without getting an EPC rating
beforehand. From 2025, the minimum grade will increase to a C, so some
properties may require substantial work to ensure that they are adequate for
renting before this time. If you aren’t sure what the best approach to the
process is for your residential or commercial property in Hull, then you can always arrange to speak to a commercial EPC provider for
the best next steps.
