Commercial Insurance Articles
Energy Performance Certificates
30 Nov 2009
It is almost a year since the government introduced mandatory Energy Performance Certificates (EPCs) for all landlords but the debate about their usefulness is still going on.
Legislation came in from October 2008 requiring all commercial, residential and rented property to have the certificate after energy assessors have carried out a check of the house. The scheme intended to encourage landlords to make home improvements to ensure their property was energy efficient. Government perception was that tenants would be more attracted to houses which had a better ranking as it would result in lower costs for energy bills.
Each house is given a ranking from A to G, with A being the most efficient and lowest in running costs and G being environmentally unfriendly. Both the current and the potential thermal energy rating is ranked, with the average actual efficiency being D. The report, which is valid for ten years, also offers suggestions on how the ranking can be improved, such as installing loft insulation, which aims to encourage landlords to make the amends to boost their score.
The recommendation report does not have to be acted upon but includes improvements to reduce energy loss, like loft insulation, the savings this would equate to and how the rating of the property would be altered if they were taken on board.
According to the government: "You don't have to act on the recommendations in the recommendation report. However, if you decide to do so, it could make your property more attractive for sale or rent by making it more energy efficient."
Every home is ranked using the same measurements, meaning that all properties are comparable with each other, to make it easier for tenants to select a more efficient property.
Landlords needing to apply for the certificate can get a domestic energy assessor but should ensure that they are accredited. Approved assessors are listed on a government website. Prices for the assessments will vary but are around £100 for an average-sized home.
Leaseholders have been warned that if they fail to provide tenants with an EPC they could face fines of up to £5,000. Those renting their home out should ensure that the certificate is displayed clearly in the house and provided to prospective tenants.
Prior to the scheme the National Landlords Association (NLA) said that tenants would be more attracted to energy efficient properties. Anthony Zahra, a spokesperson for the National Landlords' Association, said that before the launch of the EPCs landlords were investing in energy saving measures.
"With the credit crunch tenants are looking for lower fuel bills and landlords seem to be responding positively to this," he added.
However, landlords have objected to the scheme, saying that it added to the already high costs they must face to comply with legislation. A recent poll by Landlord Assist, which has an online database of members, said that there are a large number of fees leaseholders must pay, including "a gas safety inspection, energy performance certificate, inventory, letting fee, HMO Licence, electricity check and agents commission".
However, the Scottish NLA said that it supported the scheme: "Prospective tenants in Scotland will be able to see the heating costs of the houses and flats they view, in advance of signing on the dotted line. And given the current economic problems, it's likely many tenants will start voting with their wallets."
EPCs have also been backed by Home Information Packs supplier Hips.co.uk, with the organisation saying that both tenants and landlords can benefit from the scheme with simple loft insulation saving renters around £500 per year in energy bills for the average home.
The comments came after a survey from the NLA, which stated that its members are questioning the need for the certificate. It said that tenants are not taking note of the information, meaning it is not influencing rental opportunities.
Many renters are not aware of the legislation, how to use the information and that it may save them money. Sussanne Chambers, a director of the NLA, said: "What has become apparent is that tenants don’t seem to be interested in them, or use them as a deciding factor in choosing a rental property."
She said that many landlords are "left wondering" how useful the information is, but said responsible leaseholders are still buying them and complying to legislation.
There have been suggestions of taking the EPC scheme one step further and not allowed landlords to rent out inefficient houses. A spokeswoman for the Energy Saving Trust said that the government should implement legislation which means that any property ranking F or G should not be allowed to go on the sale or rental market.
She said that landlords should be given funding support to make the changes and everyone who wants to act should be able to do so in the coming years. "But the danger of climate change is so important that – for people who choose not to act between now and 2016 – regulation has to be considered to drive action on the most energy inefficient homes," she added.
The spokeswoman said that only historic homes should be exempt as some changes could damage the character of the properties and that there is no one-size-fits-all solution. However, she said that small improvements which would move a home from an F or G rating to an E would result in huge money and carbon dioxide savings.
Such a scheme would create more costs for some landlords and could lead to fewer investors coming to the market. However, the future success of the scheme remains to be seen.
