If you haven’t already, you’re going to be reading a lot about Energy Performance Certificates (EPCs) over the coming weeks and months.
You and your landlord clients need to be aware of the 2025 EPC requirements for rental properties and have a strategy in place to meet them.
Due to the climate crisis and the government’s push towards ‘net zero’ by 2050, all rental properties will need an EPC rating of ‘C’ or above by 2025.
The new regulations will be brought in for new tenancies first, followed by all tenancies from 2028. If a landlord doesn’t have a valid EPC, the fine is increasing from £5,000 to £30,000 from 2025.
This means landlords need to get their properties up to the required EPC standards within two and a half years. As some properties may need substantially more work than others – and with a labour in short supply, landlords need to take action now.
Presuming the landlord already has an EPC, it will contain a list of recommendations to make the property more energy efficient. As a rule, insulating walls, floor and any loft space is the best place to start, as is having a ‘smart meter’ installed.
All of this is going to cost, of course, with the government estimating that on average the costs of improvements needed to reach an EPC rating of “C” will total around £4,700.
There is currently a cap of £3,500 on landlords’ energy performance investment, but as the higher EPC rating will require a greater investment, the cap is to be raised to £10,000.
Consequently, brokers would be advised to get in touch with their landlord clients as soon as possible and find out how they can help them with financing their refurbishments.
If a landlord doesn’t have an EPC then they just need to book an Energy Assessment inspection, which lasts around 30 to 40 minutes. Once an EPC has been issued, it is then valid for 10 years. Once it runs out, there is currently no requirement for a landlord to get a new one unless they are entering a new tenancy with new tenants or selling the property.
At Hampshire Trust Bank (HTB) we’re currently receiving an increasing number of enquiries from our broker partners who have clients looking to improve the energy efficiency of their properties. This is why we’ve just introduced a new product for clients looking at improving the EPC rating of their property via refurbishment.
A hybrid product which combines the benefits of a light refurbishment bridging product wrapped in a term loan, Bridge EPC Refurb provides the borrower with added benefits if the property achieves an EPC ‘C’ or above rating after six months.
The product consists of a six-month bridging loan followed by a term loan. We will discount the standard rate by 20bps on achieving an EPC ‘C’ rating or above, with the client having six months to deliver the improvements. HTB will also pay for the new EPC certificate.
We are meeting a real need with Bridge EPC Refurb and have designed this product in response to the growing requests from our intermediary partners, ensuring they can offer a credible solution to landlords allowing them to focus on getting their properties up to fast-approaching energy efficiency standards.
It’s now over to brokers to remind their landlord clients of the need to deal with the impending EPC requirements today.
Sally Wright is head of intermediary distribution, specialist mortgages at Hampshire Trust Bank
