MAKING THE GRADE

An estimated 15 percent of greenhouse gas emissions in the UK come from housing, largely as a result of inadequate insulation and heat that is purchased but then lost due to poor energy efficiency

Currently in England and Wales, the Domestic Minimum Energy Efficiency Standards set out the lowest energy efficiency level permitted for private rented homes.

All tenancies (existing or new) must have a minimum EPC (energy performance certificate) rating of ‘E’ or above unless they have a valid exemption in place.

The exemptions are as follows: upgrade the property would exceed £3,500 (including VAT).

Under the ‘all relevant improvements’ exemption – this applies if the property is still below a rating of E after improvements have been made up to the cost cap (currently £3,500 including VAT), or if there are none that can be made.

Following a consultation in December 2020, the government announced changes to the energy efficiency standards for England and Wales.

A landlord is exempt from the above if they meet the criteria for an affordability exemption, as may be outlined in regulations made by the Secretary of State. These have not yet been specified.

If the new regulations come into place, the penalty for not having a valid EPC will increase from £5,000 to £30,000 from 2025.

It is predicted that the current cost cap relating to the ‘high cost’ exemption of £3,500 will rise to £10,000.

It is estimated that two-thirds of the UK’s private rented housing stock currently has an EPC below a C rating.

The high cost exemption.

• ‘All relevant improvements

• made’ exemption.

• Third-party consent

Wall insulation exemption.

• exemption.

• exemption.

Property devaluation

The most widely used exemptions currently are the ‘high cost’ and ‘all relevant improvements made’ exemptions. Regarding the former, this exemption applies if the cheapest recommended measure to

It is proposed that from 31st December 2025 all newly rented properties will be required to have a minimum EPC rating of ‘C’ or above. Existing tenancies will have until 31st December 2028 to comply with the new regulations.

The changes are part of the new Minimum Energy Performance of Buildings Bill that is currently going through its 2nd reading in the House of Commons at the time of going to press.

The Bill states “The Secretary of State must ensure that all domestic properties achieve at least EPC Band C by 2035, where practical, cost-effective and affordable”.

The need to upgrade housing will affect older properties disproportionately. In rural areas there are typically a higher proportion of older properties, so the rural housing sector may be particularly hard-hit.

It likely to be very difficult and expensive to update these older homes to meet the new energy efficiency standards.

With regard to the tax implications, landlords have additional worries. Making improvements to property to improve its EPC rating is classed as capital expenditure rather than repair and maintenance. This means that making improvements to comply with the regulations cannot be written off against profit for tax purposes.

Before we all feel too gloomy, there are some grants available that aim to address concerns over the cost of making appropriate upgrades, as follows:

Boiler Upgrade Scheme • Home Upgrade Grant • phase 2

Sustainable Warmth

• Competition

Social Housing • Decarbonisation Fund

Energy Company Obligation • (ECO)

These grants are not delivered directly by the government, but through installers, local authorities, energy companies and other bodies. n

THE BOTTOM LINE –

HOW MUCH WILL IT COST?

Galbraith worked with an estate in Northumberland to assess the required upgrades to six traditional properties, all with an EPC rating of E and situated in close proximity to each other.

Using the government’s EPC information website which suggests the improvements that are likely to be required and sets out illustrative costs, on average it would cost £24,000 to bring each property up to a rating of C.

Galbraith is working with a number of clients to inspect rural properties, assess grants which may be available and to plan a budget for potential upgrades, in line with the current deadlines.

If you have not had an inspection of your property to assess its energy performance rating for a while, we recommend that you should commission this as soon as possible from an appropriately qualified EPC assessor.

It is a good idea to start planning for the future – once you have an idea of the upgrades that may be required to your property, set out a plan of the costs involved and prioritise the most crucial energy saving measures first. Technology is always improving and this applies to the housing sector too. Energy efficient windows and insulation can make an enormous difference to a property’s EPC rating.

Above all, investigate grants that may be

Will Todd 07917 050421 william.todd@Galbraithgroup.com

For more information or to discuss the best add value to a rural property, please contact me: Will Todd, for Galbraith in Blagdon.