How will new EPC reforms affect the Cambridge rental market?
The Government has now launched a consultation on a series of sweeping changes to Energy Performance Certificate (EPC) regulations in its drive towards net zero. These proposals could significantly impact both sales and lettings agents across the UK.
For years, EPCs have been criticised for their accuracy and usefulness. In response, the government is looking to overhaul the system to make it more practical and comprehensive, providing a clearer picture of a property’s energy efficiency.
A more complete picture of energy performance
The new proposals suggest using multiple metrics to improve the depth and clarity of EPC ratings:
- Energy cost: helping buyers and residents to understand the financial implications of a building’s efficiency and how they could be improved.
- Carbon emissions: highlighting the estimated environmental impact of a building’s energy consumption.
- Energy usage: providing insight into overall energy consumption to identify areas for efficiency improvements.
- Fabric performance: assessing insulation levels to ensure comfortable and energy-efficient living spaces.
- Heating system: offering details on the efficiency and environmental impact of the heating system.
- Smart readiness: evaluating a building’s ability to integrate smart technologies that can optimise energy use and access cheaper tariffs.
In addition, the government is considering incorporating SMETERS, which measure actual energy consumption using smart meters, adjusted for prevailing weather conditions. This would provide a more accurate measure of a building’s energy use in real-world conditions.
Key changes for sales and lettings
The proposals include significant changes for both the sales and rental markets, including:
- Scrapping the 28-day rule: sellers and landlords would need a valid EPC before marketing a property.
- Extending EPC requirements for HMOs: a valid EPC would be required for the entire property every time a room is rented out.
- Short-term holiday lets to require EPCs: a major change that would bring these properties in line with long-term rentals.
- More frequent testing: EPCs may need to be renewed more often than the current 10-year period.
- EPC validity throughout tenancy: if an EPC expires mid-tenancy, a new one would be required before the contract concludes.
The consultation runs until 26 February 2025, with any confirmed changes set to be implemented in the second half of 2026.
Our thoughts
Since EPCs were introduced in 2007 it has made very little difference on residents choosing one property over another. However, most people understand that a Victorian Terrance might have a lower rating that a new build in Alconbury.
But let’s be honest there are not enough homes to choose from. In saying that it would be totally wrong to offer a property that cannot be heated. In 2007 it was suggested they would be used to recalculate council tax but that seems to have been shelved now that NET ZERO is on the agenda. The government seems to have taken data from the Low Income Low Energy Efficiency (LILEE) indicator and English Housing Survey (EHS). They estimate thereare 500,000 homes with and EPCs of D and below. They have also worked out that increasing the energy efficiency of a home to a C will save the household an average of £240 per year. What they seem to have forgotten that if a landlord is required to spend an average of £6,000 to make improvements (UK GOV estimate) the rental will increase. So I am really not sure how this will help anyone looking to find a new home in the PRS!
