New EPC Regulations for Landlords in 2025

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UK Government's New EPC Regulations for Landlords

As part of the plan for the UK to reach net zero carbon emissions by 2050, ensuring that all rental properties are as energy-efficient as possible will be key. Above most others, this shift is likely to characterise the real estate industry and the development of new-build properties over the coming decades.

Making these changes both a reality and a requirement are the government’s latest proposals regarding the Energy Performance Certificate (EPC) rating of rental properties.

Understandably, these latest announcements have been the source of a certain sense of anxiety among landlords, largely due to the short time frame the government has proposed for the new regulations to be put in place.

In reality, however, the latest EPC regulations for landlords are simply another necessary and unavoidable step towards a more sustainable and cost-effective property industry.

Moreover, from a financial perspective, there is actually much to be saved and gained for landlords and tenants on the back of these new regulations.

This is because, once in place, the new EPC regulations for landlords will reduce the energy wastage of properties, cutting costs significantly for property owners and bill-paying residents.

In this blog, we’ll aim to answer some of the most common questions surrounding these new developments, such as:

What is an EPC rating?
What are the new EPC regulations for 2023?
What are the EPC rules for Landlords 2025?
How to future-proof your property?
How to invest in the future?

Perhaps the most important piece of advice landlords can take from these new proposals is to act now to avoid costly renovations and potential fines in the future. For newer investors looking to enter the buy-to-let market, purchasing new-build or off-plan property for sale is generally a safer option in the long run, as energy-saving features are likely to be part of the investment.

In any case, it’s important to understand exactly what the government is proposing, when the measures are expected to be put in place and what the new EPC regulations for landlords really mean for the rental property industry.

So let’s clear a few things up.

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What is an EPC Rating?

An Energy Performance Certificate (EPC) effectively identifies how energy efficient a property is, as well as the Co2 emissions it produces.

Ranging from A (most efficient) to G (least efficient), an EPC rating is valid for 10 years and landlords can be heavily fined if they fail to get one.

Having an EPC rating is a legal requirement meaning an Energy Assessment Survey must be carried out at every property if an EPC rating has not yet been administered or if a previous rating has expired.

Since April 2018, properties in England and Wales have been required to achieve an EPC rating of E or above, but this is set to change again in the near future following the latest government proposals.

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What Are the New EPC Regulations for 2023 and What Are the Proposed Regulations for 2025?

After a consultation on the matter in December 2020, the government made proposals that will require all rental properties to have an EPC rating of A, B or C in order for them to be legally rented to tenants.

As mentioned above, rental properties must have an EPC rating of E or above in 2023, but if these new proposals are written into legislation, it could well mean new EPC regulations for landlords in 2025 for new-build properties and 2028 for those already on the market.

Either way, this means all properties must be brought up to standard in terms of their energy efficiency – whether new-build or older properties – if they are to be legally rented to tenants.

For properties with existing tenancies, this could mean a significant financial investment may be required from landlords who own a property with a sub-standard EPC rating.

Additionally, landlords who don’t take action to upgrade their property to at least a C rating could receive fines of up to £30,000.

The relatively narrow timeframe that has been initially proposed by the government highlights just how important it is for the UK property market to reduce its carbon footprint across the board and why landlords are being advised to act now in order to avoid incurring greater costs in the future.

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Why is it Necessary to Update EPC Regulations for Landlords?

When sweeping changes like these new EPC regulations for landlords in 2025 are proposed, they are often the source of initial backlash from those most directly affected. In many cases, this comes before the facts and positive impacts of such changes are made clear.

Therefore, considering the context is always important when people are worried about the financial impact of new regulations.

At present, the average UK home produces around 8.1 tonnes of Co2 annually. When you consider all of the UK’s households together, this accounts for approximately 26% of the country’s total Co2 emissions.

According to the Fifth Carbon Budget (released in November 2015) which covers the necessary UK emissions reductions for the period 2023-2028, UK households must reduce their Co2 emissions by at least 3.7 metric tonnes by 2030.

With this in mind, it’s quite clear that the proposed upgrade of EPC regulations for landlords is a necessary step if the UK is to reach its goal of becoming a carbon-neutral country by 2050.

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How to Future-Proof Your Property

So how can you move with the times and adapt to what seems to be the inevitable implementation of these new EPC regulations for landlords?

Well, the good news is that there are many ways to improve a property’s energy efficiency, some of which are fairly straightforward.

For investors just entering the rental market and looking to purchase a new-build or off-plan property, this generally won’t be an issue, as almost every such property will be required to meet the minimum energy efficiency standards upon completion.

The important thing, if you’re new to the private rental sector, is to invest in a property that includes the latest energy-saving or smart-build technologies in order to reduce costs in the long run.

Things to look out for that can actually increase the value of your investment and its attractiveness to eco-conscious tenants are:

Heat Recovery Systems
PV Array Solar Panels
Rainwater Recycling Systems
Energy-Efficient LED Lighting
Air Source Heat Pumps
Leak Detection Systems

With cutting-edge features like these, the energy efficiency rating of a property is unlikely to be an issue, avoiding the unwelcome stress of having to make further investments in the future.

However, for landlords with existing properties, adding features like these can be quite expensive. Although more advanced energy-saving systems like those mentioned above could well become a requirement in the future, there are some more affordable options that should still enable older properties to satisfy the new EPC regulations for landlords in 2025 or 2028.

Simple Energy Efficiency Improvements

Eco-friendly insulation can serve to reduce energy bills for tenants and landlords massively. It’s estimated that around one-third of heat is lost in the average home purely as a result of poor insulation, so ensuring that floor and wall insulation is up to scratch can be an excellent fix. Additionally, there is now a variety of eco-friendly insulation available at present which can further reduce your property’s carbon footprint.

Solar Panels can be initially expensive but serve as a huge saver in the long run, particularly in times of an energy and general cost of living crisis. Effectively harnessing solar energy can make a property more efficient as power can be stored in the event that an area’s electric grid fails, adding further value to the property.

Smart Meters have become something of a norm in homes across the UK in recent years but their value in terms of managing and monitoring energy usage can’t be understated. Although it can be frustrating when you forget to top up the meter, making smaller payments more regularly can be much more financially manageable for tenants and landlords than monthly bills that often seem more expensive than they should be.

Financial Support

As the UK begins to work towards its goal of becoming carbon neutral by 2050, it’s also well worth looking into the grants and financial support that may be available to landlords in terms of improving the energy performance of buildings.

At present, there is a cap on energy performance investments of £3,500, but it’s understood that this could be raised to as much as £10,000 on the back of the renewed EPC regulations for landlords.

With this in mind, landlords should certainly enquire sooner rather than later about any financial assistance that could help them meet the new EPC requirements.

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From an investor’s perspective, accepting the impending changes to EPC rules as a key part of a successful buy-to-let investment strategy is essential as we move into a more sustainable era of property development.

Achieving a band C EPC rating is almost certain to become a legal requirement before the end of the decade if not earlier.

Therefore, taking the relevant steps now will save a huge amount of time and money if you’re hoping to get newly rented properties on the market and start generating a passive income.

So, as an investor, what’s the best way to deal with and prepare for these proposed changes?

Well, in the long and short-term, making a smart investment now in a property that isn’t going to require high-cost updates to meet EPC standards is a pretty foolproof strategy.

In many ways, the most straightforward and cost-effective way to do this is by investing in an off-plan or new-build development located in an area with strong rental yields and a broad tenant base.

Here are a couple of examples of upcoming developments that will meet the proposed EPC for landlords regulations and make for high-earning and cost-effective new tenancies

Energy Efficient Investment Opportunities

Element – The Quarter

Currently under construction in Liverpool’s highly popular Knowledge Quarter, this groundbreaking project is part of an ambitious eco-driven brand of developments designed to provide a superior residential experience by harnessing sustainable technologies.

The first in a collection of developments to be located across key UK cities, Liverpool’s Element – The Quarter is set to transform the idea of central city living.

With the overarching goal of all Element properties to be as close to carbon neutrality as possible, the project’s award-winning developers will incorporate a plethora of energy-efficient facilities to ensure the cost-effective and eco-friendly running of each property.

Eco-Features Included:

Rainwater Recycling
PV Array Solar Panel
Shower Save System
Energy-Efficient LED Lighting
Air Source Heat Pump
Heat Recovery System

Due to these innovative eco-aspects, every Element property will have a low service charge, high rental returns and importantly, will meet the new EPC for landlords regulations proposed by the government.

Central Park

Located in the heart of one of the UK’s most popular residential districts, Liverpool’s Central Park development will be another incredible addition to the expanding buy to let market of the North West and is sure to attract an abundance of new tenants.

Comprising 174 high-quality apartments and a range of excellent onsite facilities, residents of Central Park will enjoy a premium living experience that prioritises tenant wellbeing.

Importantly, the building will also be powered by a range of eco-features that will again reduce costs for tenants and investors while assuring that the minimum EPC rating for rental properties is achieved.

Eco-Features Included:

Solar Panels
Electric Car Charging
Mechanical Ventilation and Heat Recovery
LED Lighting with Sensors
Air Source Heat Pumps
Intelligent Leak Detection System

Where is the Market Heading?

These are just a couple of the developments that symbolise what the buy-to-let property market will begin to look like over the coming years.

In terms of the new EPC regulations 2023, residential builds are already starting to incorporate efficient, energy-saving technologies into their plans, highlighting how seriously developers are taking these new rules.

In short, sustainability simply has to be a key focus of the entire property development industry as the damaging impacts of climate change become increasingly clear.

For landlords of privately rented properties, having a valid EPC is a legal requirement if they want to continue making a rental income, so now is the time to consider the latest regulations and take the appropriate steps to secure the future of your rental property.

To find out more about our UK investment opportunities and their eco-friendly benefits, get in touch today or browse our latest properties.

Author

Patrick Faulkner

Patrick is a property content writer at RWinvest. Keeping a close eye on the UK property market, Patrick helps our readers stay informed and up to date on the latest market news and statistics.

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Dhote

UK Government's New EPC Regulations for Landlords
What is an EPC Rating?
What Are the New EPC Regulations for 2023 and What Are the Proposed Regulations for 2025?
Why is it Necessary to Update EPC Regulations for Landlords?
How to Future-Proof Your Property
New EPC Regulations 2025 Gov UK - How to Invest in the Future