Landlords should target higher energy efficiency ratings

Rural landlords should aim for higher Energy Performance Certificate (EPC) ratings when improving privately rented homes, rather than meeting legal minimum standards, say property advisers.

Current legislation is underpinned by the Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015. These established the Minimum Energy Efficiency Standards (MEES) in the residential and commercial private rented sector.

The regulations set out a requirement from 1 April 2018 for any new lets and renewals in the private rented sector to have a minimum EPC rating of E. This was extended to existing tenancies on 1 April 2020.

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However, Strutt & Parker surveyor Yasmin Peach said the government was already considering a further tightening of rules (see further information box).

“The government recently published a consultation seeking views on raising the minimum EPC rating from an E to a C from 1 April 2025,” said Ms Peach.

This would apply to new tenancies and for all tenancies by 2028.

Although the move was still only a proposal, it demonstrated the direction of travel for performance standards, she said.

Green homes grant

Landlords should therefore take a longer term view on their let properties, particularly while funding via the Green Homes Grant scheme was still available, Ms Peach advised.

Those looking for ways to bring properties up to an E rating should consider what work was required to meet a C rating instead.

The government consultation, which closes on 30 December, has also suggested prioritising measures which improve the fabric of a building in terms of its energy efficiency, through insulation and draught-proofing.

Making improvements to heat and electricity generation systems should be secondary, the recommendations said.

The consultation also proposed increasing the maximum amount a landlord would be expected to invest to raise energy standards.

Currently, landlords are expected to invest up to £3,500 to make improvements but this could be raised to £10,000 including VAT.

Tenant Farmers Association adviser Caroline Foot said that an exemption rule applied to property rented by the holder of the tenancy itself.

Ms Foot said that the situation was complex, but providing the occupant was the holder of a Farm Business Tenancy or Agricultural Holdings Act tenancy, the property did not come under MEES.

However, any property sub-let on a tenanted unit, even if it was to an agricultural worker, would be subject to the MEES regulations, she said.