EPC Ratings and Landlords: Do I Need to Upgrade My Property?
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We live in an ever-changing environment when it comes to regulations and guidelines within the property sector. The focus on climate change and CO2 emissions in recent years has meant that there has been a swift implementation of standards and requirements trying to make the UK’s stock of rental properties more energy efficient. This includes the introduction of the Energy Performance Certificate or EPC.
Findings by the Ministry of Housing, Communities & Local Government highlighted the problem in 2016/2017 with approximately 320,000 dwellings not being up to the correct energy-efficiency standards and a significantly larger number of properties that will not meet future standards. They also discovered that a rented property is 40% more likely to fail to meet these standards compared to the national average for all properties.
Landlords are now legally required to carry out energy-efficiency improvements to rental properties if they do not meet the minimum energy-efficiency standards, regardless of whether a rental contract has already been signed or not. There are specific guidelines and regulations on what actions need to be taken and this article aims to explain the available options.
What are MEES requirements?
In 2016, the government introduced the Minimum Energy Efficiency Standards (MEES) for Landlords. These standards set out the minimum allowable energy-efficiency standards for privately rented properties. As of the 1st April 2020, it is a requirement that any property being privately rented must have an EPC (Energy Performance Certificate) rating of E or above to be lawful.
The rating for your property is found on the EPC. They are produced after a survey by an accredited surveyor and they assign a score to your property that indicates how energy-efficient it is. The certificate also highlights the potential score the building could achieve with the correct modifications. They are necessary in order to either sell or rent any property within the UK.
Do I Need to Upgrade My Property as a Landlord?
If you are renting out a property with an EPC rating of F or G then you are legally obligated to take steps to upgrade its energy efficiency. Previously, only rental contracts starting after the 1st April 2018 were required to meet these standards but now it applies to all rented properties, even those currently under existing contracts.
Failure to comply with MEES requirements can result in a fine of up to £5000. Also, further to the current standards, the government has indicated plans to further increase the minimum EPC requirements so that all rented properties will need to have at least a C rating by 2030. This societal focus on energy efficiency is not going to go away so it makes sense to make the required modifications to your property in order to comply with the requirements, increase its value and make it more attractive to tenants.
What Steps Do I Need to Take?
The MEES guidelines state that landlords must make immediate efforts to get their property up to at least an E standard using relevant energy-efficiency improvements. There is a large range of different improvements you can make to your property. Each EPC document contains a list of stock recommended measures to take. These recommendations can be helpful but they do not always take into account the available budget and circumstances.
A RICS qualified energy-efficiency surveyor can provide a detailed assessment of the most cost-effective way of achieving the desired improvements within the available budget.
Insulate and Keep the Building Dry to Increase EPC Rating
One of the largest sources of heat loss in a building is through the exterior walls. Studies have shown that up to 35% of all heat loss in buildings occurs through exterior walls. Most buildings in the G to F category will most likely have improperly insulated walls. This is why wall insulation is one of the most popular methods of increasing energy-efficiency in buildings. However, if the insulation method is not chosen carefully, the installation can be expensive and highly disruptive to tenants.
To minimise disruption to tenants and avoid losing precious room space, it is recommended to use Stormdry EP-Board Insulation – a thinline hybrid MgO and aerogel insulating plasterboard that is only 13 mm thick. It is adhered directly to walls using the specially formulated Stormdry EP-Board Adhesive. Calculations show that a successful application of the insulating board could potentially provide a U-value reduction of up to 61% on a typical uninsulated solid wall, greatly reducing heat loss whilst allowing the retention of the original fittings for radiators and window reveals.
If keeping the length of installation works to an absolute minimum is the priority then it is recommended to use the patented Dryzone Express Replastering System to install the insulating plasterboard of your choice. The system utilises the salt-inhibiting Dryshield Cream as a primer to adhere plasterboard directly to walls using Dryzone Drygrip Adhesive. Using dry-jointing techniques a job using Dryzone Express Replastering can be completed and ready for decoration in under 24 hours.
Finally, it is important to protect the performance of any insulation to make sure that the energy savings are long-lived. Many of the properties in need of upgrade may not only suffer from poor insulation but also from moisture ingress, which can damage insulation and negate its advantages. Studies have proven that saturated brick, stone and masonry, can have up to 50% worse thermal resistance than dry materials. In the case of internal wall insulation, it can lead to thermal shock and the occurrence of interstitial condensation and mould growth.
An application of Stormdry Masonry Protection Cream on the external leaf of exterior walls will stop rain penetration and moisture ingress on overly-porous walls, protecting the performance of insulation. The single-coat application of Stormdry Masonry Protection Cream makes it quick and cost-effective. By keeping the wall dry, Stormdry can actually enhance the performance of insulation. When used in combination with Stormdry EP-Board, computer-simulated calculations show the U-value of a solid wall is moved from 2.1 to 0.8 contributing to any upgrades in the property’s EPC.
In fact, studies using the government’s Standard Assessment Procedure have found that on certain property types, such as a mid-terraced house, the combined application of Stormdry Masonry Protection Cream and Stormdry EP-Board can be enough on its own to push a property from the F category up to the required E category.
What are My Funding Options?
The good news is that the government has increased focus on not just regulatory pressure but they have also rolled out new grant schemes and funding options to help property owners increase the energy efficiency of their properties. For example, any charges for materials, labour or associated costs in relation to energy-efficiency improvements mentioned above are only subject to a 5% VAT charge.
Landlords are encouraged under MEES to make use of any publicly-funded schemes available to them to meet the required EPC rating. The most recent initiative from the government is the Green Homes Grant, which will issue property owners with a voucher to cover two-thirds of the cost of certain energy-efficiency improvements, up to the maximum voucher value of £5000. Wall insulation is amongst the approved energy efficiency measures.
If you are funding the energy-efficiency upgrades privately, or using a mix of both government and private funding, and it is not realistically possible to reach the required minimum EPC rating then it is possible to obtain a five-year exemption. The exemption can be obtained if the modifications that have been made come to the value of at least £3500 including VAT. After five years, the landlord must then again attempt to reach the required rating.
With the future escalation of minimum EPC standards in mind, it is often more cost-effective to carry out one larger energy-efficiency retrofit than several small jobs every five years. A qualified energy-efficiency surveyor will be able to help you determine the best course of action.
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What Are My Next Steps?
The Green Homes Grant requires the use of a TrustMark-approved contractor listed for the appropriate category of energy-efficiency improvements you wish to make. For help finding an appropriate surveyor and contractor or for any technical advice on the above insulation measures, simply click here to submit an enquiry and tell us your situation.
We are also holding webinar sessions explaining the regulations, the benefits and the pitfalls regarding the various types of retrofit wall insulation on properties. Fill out the form next to this paragraph to sign-up to our Landlords, MEES & Retrofit Insulation CPD webinar.