What is an EPC?
- An EPC is an Energy Performance Certificate.
- It gives a property an energy rating from A to G with A being the most efficient.
- The certificate is valid for 10 years.
- Required for selling (all homes need a valid EPC before they can be sold), buying or renting a property.
- It contains information about a property’s energy use and typical costs along with recommendations on how to reduce energy use and save money.
- Examples of recommendations could be:
- Replacing the boiler for a more energy efficient one,
- Loft insulation,
- Low energy lighting,
- Internal or external wall insulation
- If the owner puts the recommendations in place the property can be ran more efficiently with better running costs.
- An accredited assessor will assess the property and produce a certificate.
- Examples of recommendations could be:
Minimum EPC Ratings in England and Wales for rental properties:
- Will be required to be Grade C or above (an increase from the current E rating)
- New rentals this is effective from 1st April 2025
- Existing tenancies this is effective from 1st April 2028.
Minimum EPC Ratings in Scotland for rental properties:
- Will be required to be Grade D or above
- The effective date was 1st April 2022 when a new tenancy states with a backstop date of 31st March 2025.
EPC High Cost exemptions:
The prohibition on letting property below an EPC rating of E does not apply if the cost of making even the cheapest recommended improvement would exceed £3,500 (inc. VAT).
Applies only to domestic property.
The definition of a “High Cost” Exemption from the governments website is shown at this link.
If this applies then the landlord should:
- Register this on the PRS Exemptions Register
- Upload 3 quotes from DIFFERENT installers (this needs to detail cost) and that the cheapest quotes exceeds £3500 (inc. VAT)
- Confirmation that the landlord is satisfied the measures will exceed this amount
The exemption is valid for 5 years, at this time the landlord should try to improve the EPC, if this cannot be achieved the landlord can register for a further exemption.
Some landlords could face excessive bills to make the properties more energy efficient to meet the governments requirements.
What can the Bridging Team at Clever Lending do to support landlords:
- Portfolio buy to let landlords could refinance to spread the costs across multiple properties – Clever Lending could re-mortgage a portfolio to capital raise to complete EPC improvements.
- Use bridging finance if improvements are needed and a tenant can’t therefore move in immediately. A traditional lender will normally require a tenant to move in soon after completion.
- You can use bridging finance to capital raise on old property stock while selling them off to enable an investor to purchase newer properties that are a C and above straight away
- Take advantage of properties being ‘sold off’
- Snap up a purchase quickly at auction
- Beat a buyer who is using a traditional mortgage
- Buy a portfolio of investment properties that are below C to refurb them to C
