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The EPC is 10 Years Old but 5% of Properties Still Fail

The EPC turned 10 years old in 2017. While many laud its success, a recent study by insurer AXA revealed that 5% of UK rental properties do not pass even the most basic requirements. Each time a home is rented out or put up for sale, EPC certification must be carried out although there are a couple of exceptions. Owner-occupiers renting to lodgers don’t need one and neither do owners of listed buildings. But for everybody else, they are legal requirement.

 

EPC Statistics

There are around 25 million homes in the UK, 70% of which are occupied by the owning person or family. That leaves around 7.5m in the rental sector with 375,000 (5% of 7.5m) being of insufficient condition to earn an EPC. That’s a town or city about the size of Cardiff, Coventry or Croydon.

Around 200,000 properties are presently rated F or G. That’s a town about the size of Bournemouth, Aberdeen or Newport and Cwmbran in Wales combined.

The figure for owner-occupier properties may be even higher as they tend to be in ownership for decades. It’s been law in England and Wales since 2008, in Scotland since 2009 and they remain valid for a decade. That means the first EPCs issued in England and Wales in 2008 are about to expire.

 

Enforcement Rules from April 2018

As discussed previously, EPC law changes from April 2018 to mean that properties that do not meet a minimum E rating may not be rented or sold. At present, the EPC runs from A-G ratings with F and G being the lowest. Landlords and owners must make significant changes to properties that fall into these two lowest categories in order to be able to rent them out. As noted in the previous section, some 200,000 properties fall into these two lowest categories.

Tenants who rent these lowest-rating properties have a much higher than average heating bill thanks to poor or outdated insulation. Landlords will be required to make upgrades before the April changes come into effect or find they are no longer able to rent out their properties to new tenants.

 

The Time to Act is Now

As a landlord of student tenants, it’s likely you’re more on top of the EPC than most other landlords. You work in a highly-competitive market where tenants are cost-conscious and will be aware of the need for energy saving features mostly on the basis of cost.

Poor energy performance leads to:

  • Higher bills (cost of heating to keep the mean temperature up) calculated an average cost of £61 per month for an A rating against an average £112 per month for a G rating
  • Extensive condensation and eventual black mould (a serious health hazard)