Upcoming EPC changes to rental properties

The Government has published plans to change the minimum Energy Performance Certificate (EPC) rating required for rental properties. The current regulations state that only properties with an EPC rating of A to E are legally allowed to be rented, and it is now being proposed that all rental properties will need an EPC rating of C or above by 2028.

Effect on landlords?

Landlords and prospective landlords should consider the costs required to bring their EPC up to the required rating. Presently, the maximum amount a landlord is required to spend on improving an EPC rating is £3,500. This is predicted to increase to £10,000 once the EPC changes are introduced.

As landlords have five years to act, they may wish to upgrade the properties incrementally to spread the cost of doing so. Acting early is key because as the deadline to upgrade approaches, demand for tradespeople is likely to increase.

On the other hand, landlords may wish to sell their rental properties and buy more energy efficient properties. However, landlords should be aware of Capital Gains Tax when selling property.

Effect on tenants?

Tenants should also consider the effects the upcoming EPC changes may have on them. While tenants would benefit from reduced heating bills as a result of more energy efficient properties, landlords may increase rents to fund the costs of improving their properties.

More and more landlords may decide to sell their properties and leave the rental market completely. This may have an effect on the number of properties available in the rental market and prospective tenants may struggle to find a property to rent. Rents may also increase with fewer rental properties available.

Next steps?

Though landlords have five years to take action, it is important to check the energy rating of rental properties now. Landlords are then able to begin budgeting and planning improvement works so that when the regulations come into force as expected, landlords are able to continue letting their properties.

For more information contact Frank Smith & Co Solicitors.

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