Rishi Sunak's EPC U-turn: What does it mean for landlords and tenants?

Landlords were given the welcome news by Rishi Sunak when he reversed his decision and halted plans to enforce new EPC, Energy Performance Certificate, standards for privately rented properties.

Improving EPCs was to be mandatory for landlords with properties required to be rated a minimum of C rather than the current E, unless the property was classed as exempt.

However, in a 'U-turn', Mr Sunak decided against the move because he said the additional costs for landlords to make the improvements could be passed onto tenants in the form of increased rents.

Improving EPC ratings in older houses was predicted to incur costs that would be passed onto tenants - hence the reason for Rishi Sunak deciding to drop the plans.

The news comes as the much-debated Renters Reform Bill, which will introduce measures that include giving tenants additional security against rent rises and eviction, is scheduled to be given its Second Reading in the House of Commons before the end of the year.

This is according to Michael Gove, Secretary of State for Levelling Up, Housing and Communities although he did not mention it in his address at this week's Conservative Party Conference in Manchester.

So, what does the change in the EPC requirement mean for the rental market?

Lesley Levy, Residential Lettings Manager, based in our Norwich office, said: "The initial reaction from some of our client landlords has been relief that they will not have to invest substantial sums of money at a time when many are themselves struggling financially.

"A large proportion of rental stock in Norfolk was built in the 1950s and 1960s or earlier, particularly those on farm estates.

"However the government U-turn does come with a down side. At a time when energy bills are sky-high, the decision to scrap the legislation changes means tenants will be renting properties with poorer energy efficiency for longer and the level of rent a landlord can charge will be affected."

Tasca Kruse, Residential Lettings Manager, based in our Retford office, said: "Rishi Sunak’s U-turn on the EPC changes that were meant to be coming into force will come as a relief to most landlords.

"A lot of older properties would have required drastic alterations to meet what would have been the new EPC regulations and this would have pushed a lot of landlords to sell, putting the rental market into crisis.

"Tenants should not be concerned – the minimum EPC regulations that are in force now ensure that all properties are warmed sufficiently and this will stay in place. 

"The government's decision will also help ensure that landlords don’t sell; Rishi Sunak’s move is definitely one made to ensure that the rental market keeps moving and stays active. It is far more realistic."

For more information please contact Lesley Levy in our Norwich office on 01603 629871 or Tasca Kruse in our Retford office on 01777 712945.

We have Rental experts across our Residential offices. Please see our office information here

FAQS, Frequently Asked Questions:

What is an EPC?

An EPC contains:

• Information about a property’s energy use and typical energy costs
• Recommendations about how to reduce energy use and save money

An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years.

The higher the rating, the less it costs to heat and power the property. 

A low EPC rating implies poor efficiency, which means the property will cost more to run and have a greater impact on the environment.

When do you need one?

EPCs are needed whenever a property is:

• Built
• Sold
• Rented

You must order an EPC for potential buyers and tenants before you market your property to sell or rent.

Are there any exemptions for EPCs?

Some buildings are exempt; these include:

• Places of worship
• Temporary buildings that will be used for less than two years
• Stand-alone buildings with total useful floor space of less than 50 sqms
• Industrial sites, workshops and non-residential agricultural buildings that do not use a lot of energy
• Some buildings that are due to be demolished
• Holiday accommodation that’s rented out for less than four months a year or is let under a licence to occupy
• Listed buildings - you should get advice from your local authority conservation officer if the work would alter the building’s character
• Residential buildings intended to be used less than four months a year

What is the EPC based on?

An EPC calculation features two main factors:

How can you improve an EPC rating?

Some improvements can be costly and generally include:

• Upgrading the lighting to LED light bulbs
• Insulating the walls and roof
• Investing in double or triple-glazed windows
• Upgrading the boiler
• Installing underfloor heating
• Installing a smart meter
• Investing in renewable energy

See more on EPCs

How many stages does a bill have to go through to become law?

A bill can start its journey in either the House of Commons or the House of Lords.

The First Reading is the formal presentation of the bill and doesn’t involve any debate. Government bills are usually published immediately after the first reading.

The Second Reading is when the House then debates the general principles of the bill and amendments are made at both committee and report stage.

The House decides whether to agree the bill at the Third Reading. The bill then passes to the other House. The first House is asked to agree with amendments made by the second.

Once both Houses are agreed, the bill receives Royal Assent and becomes law.

How a Bill becomes law