2025 EPC rules for residential properties not all doom and gloom for landlords, says Mason Thomas Law
Property legal experts Mason Thomas Law are urging landlords and investors not to ‘panic sell’ their portfolio in response to the introduction of the new Energy Performance Certificate (EPC) rating requirement for all rented residential premises, which comes in to force in 2025.
From 1 April 2025, residential landlords must not let any properties which have an EPC rating of less than C, unless the landlord registers an exemption. The rule will be imposed in relation to existing tenancies from 2028.
The regulation changes aim to make buildings more energy-efficient and reduce carbon emissions as part of the government target to be net-zero by 2050. And it’s not just residential properties that are affected. From 1 April 2023, commercial property landlords must not continue to let any buildings which have an EPC rating of less than E.
Faced with having to spend thousands of pounds to bring their properties, particularly older ones, up to a C rating, or face fines of up to £150,000, a number of residential landlords and investors are now looking to dispose of their portfolio.
However, it’s not necessarily all doom and gloom, says residential property expert Jo Malcolm, Director and Licensed Conveyancer of Mason Thomas Law.
She said: “There are exemptions and also caps on what you are required to spend to bring properties up to minimum standards. It’s important to read the small print before you make any decisions when it comes to buying, selling or leasing residential property.”
In terms of the exemptions for landlords of rented domestic private properties, these include:
- Price cap
You only need to undertake improvements which can be made for £10,000 inc. VAT (currently £3,500). If no improvements can be made within that cost, the landlord can apply to register an exemption for that property, rather than improve it to C.
- All improvements made
If the landlord has made all relevant energy efficiency improvements that can be made, or there are none that can be made and the property remains below a C rating, the landlord can apply to register an exemption.
- Wall insulation
Certain wall insulation systems may not be suitable in certain situations, even where they have been recommended for a property. The landlord can apply to register an exemption if there are special circumstances in which cavity wall insulation, external wall insulation systems and internal wall insulation systems should not be installed.
- Consent
Certain energy efficiency improvements may legally require third party consent before they can be installed in a property. For example, solar panels may require planning consent or consent from mortgage lenders. A landlord can apply for an exemption if they have tried to obtain consent and it was refused or subject to an unreasonable condition.
- Devaluation
If a landlord has obtained a report from an RICS surveyor advising that the installation of specific energy measures would reduce the market value of the property or the building it forms part of by more than 5% the landlord can apply for an exemption.
- New landlords
Sometimes, a landlord becomes a property owner suddenly, and in defined circumstances they can apply for an exemption from being required to obtain a valid EPC certificate for a period of six months, starting from the date the person becomes the landlord.
Where a building is exempt, landlords are required to register it on the PRS Exemptions Register. The majority of exemptions last for a period of five years.
Jo added: “If you are a residential landlord and are considering disposing of your property portfolio due to the upcoming EPC changes, before you make a decision ensure that you carefully consider the exemptions available to you and whether or not you can utilise them to your advantage.”
Full information as to the current EPC exemption position is available on the Government’s website here
If you’re selling or buying a residential property and need expert legal advice, speak to Mason Thomas Law’s expert legal and conveyancing team on 0114 2945 360 or contact us here.