What is an EPC?
When it comes to domestic and commercial buildings in the UK that are up for sale, being built or being rented out, it is a requirement that they must have an Energy Performance Certificate, otherwise known as an EPC. These certificates are required for qualifying buildings and properties in the UK, to ensure a minimum level of energy efficiency. But what exactly is an EPC, why do you need it and how do these documents work?
An Energy Performance Certificate tells you how energy efficient a particular building is and it is based on a ratings system, on a scale of A-G. A building given an A rating means that it is the most energy efficient it could be, whilst scoring a G EPC rating means that it is the least efficient it can be.
An EPC informs the person who will be using the building as to the approximate costs for heating, lighting and other energy and electricity-dependent functions. It will also inform property owners and potential buyers as to what the carbon dioxide emissions of the property are likely to be and therefore the building’s impact on the environment. EPCs are therefore very unlikely to be needed for the purposes of a second mortgage, but are necessary when purchasing a new property, perhaps funded in part by a second mortgage.
Not only does an Energy Performance Certificate inform of the property’s current rating, but it will also show what its best potential EPC rating could be if improvements in relation to its energy pitfalls were made. It also indicates how this can be done in a more cost-effective way. All EPC’s are valid for a period of 10 years from the point of being issued. Properties with better rated EPCs can be worth more than those with worse ratings, as more energy efficient properties of any nature are much more appealing to buyers.
What Information Does an EPC Provide?
When it comes to the information that is displayed on an Energy Performance Certificate, it looks similar to the multi-coloured sticker you see on new household appliances. It will include the following details:
● The overall energy efficiency of the property
● The estimated running costs of the property in respect of heating and powering the building or premises in question
● A summary of the building’s energy performance related aspects, which may include things such as its air tightness, how it uses its energy and how well insulated the property is
Who Creates EPC Ratings?
For Energy Performance Certificates produced in England, Wales and Northern Ireland, the only people who are accredited to produce an EPC are Domestic Energy Assessors. To go about acquiring an EPC, there are a number of considerations you should bear in mind:
● If you are looking for approved EPC organisations that are based in England and Wales, you can check the Landmark website in order to see who is listed on the energy performance certificate register
● If you are selling or renting a property that is based in Northern Ireland, you can check accredited EPC organisations in this location by checking out the Landmark for Northern Ireland website
● If you are looking to rent a property from an estate agent or directly from a landlord, they should provide you with the property’s up to date EPC
It may be the case that you are offered the services of an accredited domestic energy assessor through a letting agent or an estate agent. However, if you prefer, it is still possible for you to find your own and compare the prices. It may be cheaper going direct as many estate agencies have relationships with assessors, meaning they ‘mark-up’ the price.
How do EPCs Affect my Property?
As of 2008, it has been a statutory requirement for all homes let or sold to have an EPC certificate. Since April 2018, it has become a legal requirement in the UK for properties that are being marketed (this is both commercial as well as privately rented residential buildings) for let or for sale to have a minimum EPC rating of E. You will need to ensure that an approved Domestic Energy Assessor to issue an EPC on your behalf.
As a result, if you are a landlord and are granting a new lease to tenants or if you are renewing an existing lease after the aforementioned date, you will need to make sure that the building meets the eligibility criteria of a minimum EPC rating of E.
What Happens if my Property Fails its EPC?
In the event that your building does not meet the necessary requirements, it is considered unlawful for you as a landlord to grant a new tenancy (whether to existing or new tenants) until you reach a point where the property achieves the minimum rating of E. You will therefore be required to undertake remedial actions, at your own expense to rectify this.
The purpose of the remedial actions will be to increase the overall energy efficiency of the property and to ensure it is properly insulated and therefore liveable for any prospective residents or tenants. This may be done in a number of ways, which will need to be discussed with an assessor and your builder.
From 2023, it will also be illegal for landlords who may have entered into a long lease to rent out properties that already have existing tenants, if it has an EPC rating of F or G.
Do I Need an EPC When Renting or Buying a Property?
No. Whenever you are renting or buying a property, it should always be the case that the Energy Performance Certificate is handed to you with no fee. If this does not happen, it is possible for the landlord or seller to receive a fine of up to £200. If you are moving property and buying a property of any sort, you should expect the seller or the estate agent in question to provide you with an up to date EPC before purchase.
When is an EPC not Required?
There are certain circumstances and categories of property for which it is not required to have an Energy Performance Certificate, providing that you are able to demonstrate that the property in question is indeed exempt. Exemptions cover the following:
● Places of worship
● Properties that will be sold or rented with vacant possession
● Detached buildings that are less than 50 sq. meters
● Listed buildings
● Workshops, non-residential agricultural buildings that are considered to use a limited amount of energy
● Temporary buildings that are used for a period of 2 years or less