What is an EPC?
An Energy Performance Certificate (EPC) is a certificate scoring the property on its energy efficiency. The main purpose of the certificate is providing the property with an efficiency rating from A to G, with A being the most energy efficient, and G the least. The certificate also includes:
- Suggestions for improving the properties energy efficiency
- The rating that the property could potentially get should these changes be implemented
- Guidance on the cost of improvements
- Potential savings in energy costs
An EPC is valid for 10 years, you can check if your property has a valid certificate by searching the Scottish EPC Register online.
It is mandatory to have a valid EPC before a property can be marketed for rent, the rating must be included in the property advert. The EPC is also included in the Tenant Information Pack which is given to the tenant before they move into a property.
The Proposed Minimum Standard
As long as there is a valid EPC in place, there is currently no minimum standard for energy efficiency for homes in the PRS. The consultation recently carried out by the Scottish Government proposes that, as of 1st April 2019 all new tenancies will be required to have a minimum EPC rating of E, or have had an EPC carried out before the tenancy begins, and take steps to reach an E rating within the first 6 months of the tenancy. The E rating minimum standard would then be rolled out to include all privately rented properties from 31st March 2022.
The proposed plans then continue that by 1st April 2022 all new tenancies will be required to have a minimum rating of D, which would in turn be enforced for all properties by 31st March 2025.
What This Means For Landlords
Whilst the most common EPC rating for privately rented properties is currently D, with 38% (131,000) of properties falling into this category, there are still a considerable number of properties that fall below the proposed minimum standard.
The Scottish House Condition Survey, 2015 found that 28% (95,000) of PRS properties had an EPC rating below D, and 9% (30,000) had a rating below E, highlighting the number of properties that would be effected if the minimum standard is introduced.
The proposed plans effectively mean that all properties with an EPC rating of F or G will become unrentable unless measures are put in place to increase their energy efficiency rating. Increasing from a band F or G to band E, and then eventually to band D, would be a considerable task for landlords, and one that will potentially incur high costs, but improving energy efficiency will become unavoidable if landlords wish to continue renting the property. Improvements could include anything from minor – loft insulation and draught proofing – to fairly major works, such as a new heating system or upgrading windows. Under the plans local authorities would have the power to issue fines of up to £1,500 for any properties that are not compliant.