Monday, 9 March 2015

Why should Landlord care about Energy Performance Certificates? 

What is an Energy Performance Certificate (EPC)?

In basic terms an EPC contains information about a property’s energy use and typical annual energy costs.

Included within the Energy Report that accompanies it, are recommendations about how to reduce energy and save money. Displayed in a colour-coded graph an EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient).

Critically EPC are required by Landlords and Estate and Letting Agents before they market a property. They are compiled by a qualified Energy Assessor and typically cost around £50 to £75 to commission.

A relic of the much maligned Home Information Sellers Pack, you mention the need for an Energy Performance Certificate to your average landlord and he will most likely groan loudly and will bemoan yet another government ‘gimmick’. I heard one recently call it a ‘stealth tax’ on landlords. Stealth tax, gimmick or not it is here to stay.

Why fuss about EPC’s?

The carrot of a positive EPC rating

In housing terms energy costs are no longer a small add-on to the cost of renting or mortgage.  As a consequence for most ordinary people on limited budgets energy costs are a significant factor when choosing a home. Given a choice and all other attributes of a house being broadly the same, it is a fact that tenants will choose a property with a good energy rating over a poor one every day of the week.

The carrot for a landlord is the more energy efficient a house is, the greater the demand there will be for it. The fewer void periods they will have and the less money they will have to spend on recruiting new tenants.


The stick of a negative EPC rating.

Anything that ‘hits the wallet’ of a landlord is likely to focus his attention. An energy inefficient home could mean grumpy tenants who fall out of love with it. A harsh winter followed by a hefty fuel bill are incentive enough for them to seek alternative accommodation. Landlords faced with an empty flat will see a poorer return on their investment.

Currently there is a healthy demand for property locally and a relative housing shortage. Hence the balance of power in the housing market locally is still stacked in the landlords favour. 

From April 2018 the government however is intending to legislate against properties with the poorest rating.  The indications are that those with an F & G rating (currently 18% of housing stock) will not be allowed to let out their homes from April 2018. While there could be exemptions including for those that have made all reasonable steps to improve the energy efficiency, the long-term view is that the legislation will become tougher. With a further 20% of the housing stock nationally reckoned to be an ‘E’ rating this will encompass many Victorian, Edwardian and pre-war properties. This is a significant slice of the housing market locally, which we should care about. 

The carrot and the stick for Landlord is clear. A property’s energy performance can affect their bottom line investment and earning potential. Fundamentally it could affect their decision making on what investment property to buy or indeed which property in their portfolio to sell or improve.

With legislation on the horizon  and one in five of the population renting locally and this set to rise perhaps it is time to take notice and care about EPC’s?

No comments:

Post a Comment