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Why landlords should be making property more energy efficient?

Maximising the energy efficiency of a property not only ensures that landlords are complying with the latest Government regulations, but it may also make the property more attractive to prospective tenants.

We encourage our landlords to invest in energy efficient properties, thereby increasing the proportion of A-C rated properties in the private rented sector (PRS). That’s why we have a range of products available for properties with an EPC rating of A, B or C. These products are available in our portfolio and non-portfolio product ranges.

Portfolio product guide
Non-portfolio product guide

Further advance

Alternatively, if your client is looking to make energy efficient improvements to their property and need additional funding, they may be able to apply for a further advance. Take a look at our further advance guides to see the full range of products available.

Portfolio further advance guide
Non-portfolio further advance guide

Energy Performance Certificate Regulations

Since April 2018, landlords have been required to achieve a minimum rating of E on the Energy Performance Certificate (EPC) for their rental property for new tenancies or tenancy renewals.

From April 2020, this was extended to cover existing tenancies, meaning all rented properties now need to have an EPC rating of E, even where there has been no change in tenancy.

Under Government proposals, by 2025 homes in the PRS will need a minimum EPC rating of C for new tenancies and in 2028, this will extend to all homes in the sector. However, these new proposals are not yet confirmed, and the Government is due to update its plans in 2023.

You can find more information about EPC regulations on the Government website.

What is an Energy Performance Certificate?

An Energy Performance Certificate (EPC) gives each building a Standard Assessment Procedure (SAP) rating. This equates to an energy rating from A to G (A is very efficient, and G is very inefficient), like those already seen on white goods.

The EPC will show the energy efficiency levels of a property, so a prospective tenant is able to determine and compare the relative financial running costs of renting a property.

Find an EPC for a UK property

What are the current EPC regulations?

Since April 2020, all rented properties must have an EPC rating of E or above.

If a property is let on an assured tenancy, a regulated tenancy or a domestic agricultural tenancy, and is legally required to have an EPC, it is covered by these regulations.

If the property that is let has been marketed for sale or let, or modified in the past 10 years, then it’s likely that it will be legally required to have an EPC.

Full guidance for landlords on the current EPC regulations can be found on the Government website.

What if a property has an EPC rating of F or G?

Since 1 April 2020, properties with an EPC rating of F or G are now classed as unrentable and energy efficiency improvements must be made to raise the raise the EPC rating to meet the minimum requirement.

However, under the regulation’s cost cap, landlords will never be required to spend more than £3,500, including VAT for energy efficiency improvements. Where a property cannot be improved sufficiently to achieve an EPC rating of E for £3,500 or less, landlords must take all steps up to £3,500 and register an ‘all improvements made’ exemption.

Some properties are exempt from the regulations; for example, if the building is listed or protected. If the property meets the guidelines for exemption, the landlord can apply via the PRS Exemption Register

What are the potential changes to EPC regulations?

Under Government proposals, by 2025, homes in the PRS will need a minimum EPC rating of C for new tenancies and in 2028, this will extend to all homes in the sector.

This new requirement will also see an increase in the landlord investment level being capped to £10,000. There will be exemptions to these regulations, but these are yet to be confirmed.

These new rules are not yet set in stone and the Government is due to update its plans in 2023.

Green mortgage products

We have a range of products available for landlords with properties displaying an EPC rating of A, B or C

Green mortgage news and blogs

stephen-lofthouse.jpg
Monday, 17/07/2023

Join our Regional Surveyor, Stephen Lofthouse, as he reveals the world of buy-to-let property assessment and the growing importance of Energy Performance Certificates (EPCs).

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Thursday, 27/01/2022

Discover four ways to improve the energy efficiency of your rental property and meet the new EPC minimum standards expected to be unveiled by the Government.

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Thursday, 27/01/2022

We all agree that we need to upgrade the UK’s housing stock to meet net zero, but we can’t shy away from the consequences of proposed changes for the private rented sector.

Help for landlords

Maximising the energy efficiency of a property not only ensures that landlords are complying with the latest Government regulations, but it may also make a property more attractive to prospective tenants.

For further energy efficiency advice, the Energy Savings Trust is a great place to start.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551