Energy Performance Certificate rating Guidance – Avoid the fines

Energy Performance Certificate – how to avoid the fines

An Energy Performance Certificate (EPC) is a four page document detailing the energy efficiency of a property. The traffic light rating system rates each property from A to G, with A being the most efficient. The EPC provides information on a properties energy usage, as well as typical costs to run. An EPC can also contain recommendations on how you could improve your properties energy efficiency.

Since April 2020, landlords are no longer allowed to let properties that have an EPC below E. However, if you have a valid exemption in place you may be able to have an EPC lower than E. If you are currently letting a property with an EPC lower than E, you must take action or register an exemption.

All buildings that are covered by the Domestic Minimum Energy Efficiency Standard (MEES) Regulations are legally required to have an EPC.

• When do you need an EPC
• How to get an EPC
• Funding the improvements
• Exemptions
• Penalties

When do you need an Energy Performance Certificate

An EPC is generally required for most properties, and lasts for 10 years. As a landlord, you will need an EPC when you:

• Let out a property as an individual house. This can be described as a self contained property with its own bathroom and kitchen facilities.
• When letting out multiple self contained flats. In this case, each flat is a self contained property with its own bathroom and kitchen facilities. If letting out multiple flats, each flat must have its own EPC.
• When letting out shared housing. This is when a whole property is being let out to a group, for example, student housing. They must all be on a single tenancy agreement. Only one EPC will be needed for the whole house
• When letting out a mixture of self contained and non-self contained properties. Each self contained property must have an EPC. But, the rest of the property does not need an EPC.

However, if you are letting out a bedsit/rooms with shared kitchens and bathrooms, where each tenant has their own tenancy agreement, no EPC is needed.

Additionally, no EPC is needed if letting out rooms in a hostel or hall of residence.

How to get an Energy Performance Certificate

To get an EPC, you need to find an accredited assessor. They will be able to properly evaluate the property, and produce the certificate.

If you are based in England, Wales or Northern Ireland, click here.

If you are based in Scotland, click here.

Funding improvements to the property

If you are required to make improvements to the property, you will never be required to spend more than £3,500. There are 3 ways to fund further improvements to the property.

Third party funding

You may be able to generate enough third party funding to improve the EPC to E. You are then able to use this to fully fund the improvements without spending your own money. In this case, the cost cap does not apply, and all funds should be used on improving the EPC of the property, past E if possible.

Combined third party and self funding

If you are not able to generate enough third party funding to improve your property the level E, and it is less than £3,500, you may have to top it up with your own funds.

Self funding

If you can’t get any funding, you will have to use your own money. While you do not need to spend more than the cost cap of £3,500, you do have to improve your property to E if possible.

It can cost more than £3,500 to get the property to level E. In this case you should install all recommended measures, then register an exemption.

Exemptions

There are multiple times when you will be able to register an exemption. In order to register, you will need the address of the property, the type of exemption you are registering for, and a copy of a valid EPC.

All relevant improvements made

You can register for this exemption if:

• You have made improvements to the property up to the cost cap, and the property still is not at level E or higher.
• There are no improvements to be made.

The exemption lasts 5 years, after which you will have to make improvements or reapply.

Additional information will be needed to apply for this exemption. This includes full details of all improvements made to the property, and if you didn’t rely on the EPC for recommendations, then a copy of a surveyors report or appropriate suggestions.

High cost

This exemption applies if no improvement can be made without exceeding the cost cap of £3,500.

This exemption also lasts 5 years, after which you must attempt to improve the EPC of the property, and then reapply.

To register for this exemption, you will need to supply 3 quotes from qualified installers for the purchasing and instalment of the cheapest improvement, proving the cost exceeds £3,500. You will also need to provide written confirmation that the improvement costs more than the cost cap.

Wall insulation

This exemption only applies if the property needs improvements including external wall insulation, internal wall insulation, or cavity wall insulation. You must have written expert advice stating that these improvements will negatively impact the structure or fabric of the property.

This exemption also lasts 5 years, after which you must attempt to improve the EPC of the property, and then reapply.

To register, you must provide the written advice from the expert, stating that the improvements will negatively impact the building/property.

Third party consent

If you require consent from a third party for the improvements to be made, but you cannot obtain consent, then you can apply for this exemption. Examples of a third party could be landlords, mortgagee, a tenant or the planning department.

This exemption lasts either 5 years, or if you are not able to get a tenants consent, then until the end of the current tenancy.

When either of the criteria are met, you must attempt to improve the property again.

In order to register this exemption you must have copies of any correspondence or relevant documents. These documents must show the steps you have taken to request consent, and the declining of consent. These documents could be letters to and from a tenant, or planning department notification.

Property devaluation

This exemption applies if you can prove that making energy efficiency improvements would devalue the property by more than 5%. To register this exemption you will need a survey done by an independent surveyor. The surveyor must be on the Royal Institute of Chartered Surveyors register of valuers. They must then suggest that installing the improvements will devalue the property, or the building the property is part of, by more than 5%.

This exemption lasts for 5 years, after which you must either make the improvements or reapply.

To register this exemption you must have a copy of the report by the independent surveyor. This report must provide evidence that the improvements will decrease the property value by more than 5%.

Temporary exemption due to recently becoming a landlord

If you have recently become a landlord under certain circumstances (click here for more details) you are not expected to take action to improve your EPC rating immediately. This exemption lasts 6 months from the date you became a landlord. After these 6 months you will either have to make improvements to your EPC rating, or apply for another exemption if one applies.

In order to apply for this exemption, you must have proof of when you became a landlord, and the details of how you became a landlord.

How to register an exemption

In order to register, you must provide all relevant for your exemption. This is dependant on which exemption you are applying for. Once you have applied you are not able to change information.

Penalties

The MEES regulations are enforced by the local authority. These regulations state that landlords may not let out a property with an EPC below the rating of E. If the local authority feels that a landlord has failed to provide a property with an adequate EPC rating, they will serve the landlord a compliance notice. If the landlord has breached the regulations, they will be served with a financial penalty.

The maximum total penalty that can be applied to a single property is £5,000. The various penalties that can be applied are:

• £2,000 or less for renting out a non-compliant property for less than three months.
• £4,000 or less for renting out a non-compliant property for more than three months.
• £1,000 or less for providing a false or mis-leading information on the PRS exemption register.
• £2,000 or less for a failure to comply with a compliance notice.

With each penalty there could also be a publication penalty applied as well or instead of the original fine.

Right of Review/Appeal

If you do not agree with the decision made it is possible to appeal. For more details on what is required click here.

What’s around the corner? – £30,000 fines and higher costs

The government are consulting on a shake up of the current rules which will require properties which are let out to comply with higher energy conservation standards. In addition the amount they expect landlords to pay to carry out the improvements will be higher. The potential fines for not doing so are enormous and could be up to £30,000 per property per breach.

Read the detailed consultation document – Click Here

Talk to a Promise Money adviser for more details

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