Although the Energy Performance Certificate (EPC) has been with us since 2007, it has largely been seen as more of an administrative bother that has needed to help get a property let or sold. However, from April 2018, buy-to-let landlords will struggle to get mortgages for their properties that don’t have the correct EPC rating. The importance of obtaining an EPC just skyrocketed!
Rated from A (most efficient) to G, EPCs contain information about a property’s energy efficiency output and costs, as well as information on how its energy performance can be improved. EPCs are required when a property is rented out, sold and built, and are valid for 10 years. With as many as one in four landlords unaware of their properties’ EPC rating, letting agents have urged them to act quickly so as to meet the new regulations.
New measures that are being introduced in April of next year will mean residential landlords will not be allowed to grant tenancies to new or existing tenants unless their properties have an EPC rating of an E or higher, and from April 2020, properties that have already been let will need to have been improved to an EPC rating of E or above. Failure to comply with these new standards can result in fines of up to £5,000.
While these rules are important to abide by from an energy efficiency perspective as well as the likelihood that lower EPC ratings could devalue their property, they will now be crucial if landlords wish to secure buy-to-let mortgage deals, both for new purchases and remortgaging.
From April 1st or earlier, depending on the lender, buy-to-let borrowers should expect to provide their adequate EPC rating so that they don’t risk having any finances refused. Keeping a valid EPC rating may also be written into mortgage contact terms and conditions.
To make sure landlords are going to be able to get the mortgages they want, it is highly recommended that they check their current properties’ EPC rating. If any properties don’t currently have an EPC rating, they will need to get one. This will determine whether any work will be needed to improve its rating.
If the rating is not high enough, improvements will need to be made. There are various ways in which landlords can improve their properties’ EPC rating, which can include various types of improved insulation (walls, duct and roof), draught proofing, thermostat room heaters, water source heat pumps, double or triple glazing, along with more efficient taps. As long as landlords improve their buildings’ EPC ratings to E or above, it doesn’t matter what measures they take to get there.
There are exemptions to the new rules, however, landlords will need to check whether they apply to their properties and if so, they will have to register for any exemptions. They are urged to do this as soon as possible, so that they don’t face issues in the future, and aren’t left with empty properties, or penalties for non-compliance.