New energy efficiency rules for rental properties scrapped
Landlords will no longer be required to improve the energy efficiency of their rental properties as the government has scrapped plans to introduce new minimum standards.
The announcement was made as part of prime minister Rishi Sunak’s green review, which included an overhaul of measures designed to meet net zero targets.
Energy Performance Certificate (EPC) proposals called for a new minimum rating for rental properties in England and Wales – changing the rating from E to C by 2025.
Despite a consultation starting 2020, the proposed legislation hadn’t yet made its way through parliament before being scrapped.
Read on to find out how the government’s decision could affect buy-to-let landlords.
Changes to minimum energy efficiency standards scrapped Proposals to improve energy efficiency of homes in the rental sector were revealed in 2021, following a government consultation.
The initial timeline said all new tenancies must have an EPC rating of C (or better) by 2025 and existing tenancies should comply by 2028.
However, Rishi Sunak said that landlords will no longer need to upgrade the energy efficiency of their properties, but the government will continue to “encourage households to do so where they can”.
He said that the u-turn, which includes delaying plans to ban the sale of petrol and diesel cars, is to reduce the impact of changes that “would have cost families upwards of five, ten, fifteen thousand pounds".
EPC uncertainty has been “damaging to rental property supply” It’s now been over two years since the consultation closed, and the National Residential Landlords Association (NRLA) said the government’s u-turn causes further uncertainty for landlords.
“The uncertainty surrounding energy efficiency policy has been hugely damaging to the supply of rented properties,” said Ben Beadle, Chief Executive of the NRLA.
“Landlords are struggling to make investment decisions without a clear idea of the government's direction of travel.
“It is welcome that landlords will not be required to invest substantial sums of money during a cost-of-living crisis when many are themselves struggling financially.
“However, ministers need to use the space they are creating to develop a full plan that supports the rental market to make the energy efficiency improvements we all want to see.”
What does this mean for buy-to-let landlords? Some landlords will be relieved that these plans have been scrapped.
Many were concerned about the prospect of a short deadline to improve the energy efficiency of their properties, as well as the associated costs.
A recent Simply Business survey of almost 1,500 landlords found that 42 per cent considered making their property more energy efficient as their biggest challenge.
Almost a fifth (18 per cent) anticipated energy efficiency improvements could cost them £10,001+, while a quarter (25 per cent) expected them to cost between £5,000 and £10,000.
At a time when energy bills are sky-high, the decision to scrap the legislation changes means that tenants could be renting properties with poor energy efficiency for longer.
Landlords with tenancy agreements that have bills included will be particularly conscious of this.
The spotlight has also been on rental properties recently with the government considering a new Decent Homes Standard for the private rental sector. This comes as a quarter of UK rental homes are considered ‘non decent’.
What other changes to net zero measures were announced? Alongside the decision to scrap new energy efficiency measures, Rishi Sunak also announced that:
boiler upgrade scheme grants will be increased by 50 per cent to £7,500 the ban on installing oil and Liquid Petroleum Gas (LPG) boilers and new coal heating for off-grid homes has been delayed from 2026 until 2035 an exemption will be introduced for households who struggle to switch to heat pumps from 2035 (expected to cover around a fifth of homes) What about energy performance ratings in the rest of the UK? The UK government sets EPC ratings in England and Wales, so the consultation mentioned above is specifically related to properties located in these countries.
However, the Scottish government ran a separate consultation on the same issue in 2021. And properties in Northern Ireland come under a different set of energy efficiency regulations too.
How do you feel about the government's decision to scrap EPC changes? Let us know in the comments.