What proposed changes to energy performance certificates (EPCs) could mean for property owners

On Wednesday 4 December, rural businesses’ eyes may have been on the House of Commons for an opposition debate on Agricultural Property Relief (APR) and the Chancellor’s budget. However, the government made another announcement which may have a significant impact on CLA members in England and Wales.

The UK Government has now published a consultation on ‘Reforms to the Energy Performance of Buildings regime’ which will run until 26 February 2025. Energy performance certificates (EPCs) have been required for any domestic property which has been sold, let or marketed since October 2008, and they are the basis of other regulations such as the Minimum Energy Efficiency Standards (MEES).

It has long been proposed that the MEES will be upgraded as part of the country’s commitment to meet net zero by 2050, and there has been recognition that this change cannot happen until EPCs are significantly reformed. The latest consultation is the first step in reforming EPCs.

The consultation does not cover non-domestic EPCs, but notes that “the government is proposing the carbon metric is maintained as the single headline metric on non-domestic EPCs at this time”.

The consultation proposes overhauling the metrics which are listed on an EPC. Currently, the primary metric is the Energy Efficiency Rating (EER) which indicates the cost of heating the home. There is also the Energy Impact Rating (EIR) which assesses the carbon impact of the home. The consultation sets out six new metrics, four of which the government proposes to be the new headline metrics. The six metrics considered in the consultation are:

• Energy cost
• Fabric performance
• Heating system
• Smart readiness
• Carbon
• Energy use

The government has proposed that ‘carbon’ and ‘energy use’ should not be included as headline metrics on a domestic EPC. This is because those metrics may not drive the policy changes that MPs are hoping for, i.e. including carbon and energy use on an EPC may not aid lowering fuel bills or the progress towards net zero.

The government is concerned that the carbon metric in its current form (the EIR) would not incentivise actions to reach net zero in an energy efficient manner. For example, it does not take into account embodied carbon, and as emissions factors change over time, the rating for a property may vary even when no changes have been made to the building itself.

Currently, an EPC is required when a property is sold, let or marketed; only when one of these trigger events occurs must a property owner obtain a certificate. This consultation proposes expanding the trigger events, to include the expiration of an EPC.

Something which has caused confusion for property owners since the policy was introduced is whether a new EPC should be obtained when the existing certificate expires. An EPC is currently valid for 10 years, and its expiration has not been a trigger for obtaining a new one. A change would mean that for private rented sector tenancies, a valid EPC would be required throughout the duration of the tenancy period.

Short-term rental properties (a.k.a. holiday lets) are currently exempt from the requirement to have an EPC, provided that the occupier is not responsible for meeting the energy costs of the property. The consultation proposes to change this, so that letting a property for the short-term will require an EPC (i.e. usually less than 31 days, although a definition for the purposes of EPC legislation is to be determined), regardless of who is responsible for meeting the costs of energy.

Buildings officially protected as part of a designated environment or because of their special architectural or historical merit are not currently required to have an EPC “in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance”. This means that generally, properties which are listed or are in conservation areas have been outside of the EPC regulations.

The government is proposing that all heritage buildings would be required to have an EPC. The consultation pre-empts concerns of the heritage sector and notes that “even if obtaining an EPC were to bring a heritage building into scope of MEES, there are relevant exemptions”.

At present, EPCs are valid for 10 years. The consultation asks for views on reducing this period to either: less than two years, two years, five years, seven years, or keeping the validity period at 10 years. If the government makes this change alongside creating a new trigger event on expiry of an EPC, this could mean that the certificates will need to be instructed much more regularly.

The UK Government’s preference is to allow all existing EPCs to remain valid until the end of their existing period and apply any new validity period to new certificates.

It is inevitable that any new metrics on an EPC will align somewhat to the existing guidelines, and there may be individual properties which when rated under both regimes show different results. The government recognises this and notes that some property owners may have already acted to achieve compliance with future targets (e.g. EPC ‘C’) based on the existing metrics. The consultation therefore asks for suggestions for how the transitional arrangements can be drafted in such a way to encourage early action and “will explore options for ‘deemed to satisfy’ arrangements, or ‘carry over’ rights”.

The consultation suggests that the changes proposed will take effect from the second half of 2026.

The government acknowledges that there is a lack of trust in the accuracy and reliability of EPCs and therefore commits to reviewing the Standard Assessment Procedure (SAP) and the Reduced data SAP (RdSAP). The consultation seeks views on energy assessor training, standards and accreditation.

The consultation seeks views on some proposals to increase compliance with the EPC regime, it notes that most compliance with the EPC regime is in fact driven by efforts to comply with the MEES. The consultation also proposes increasing the penalties for not following the domestic regulations, from £200 currently, to either an inflation adjusted increase (£325), or doubled (£400).

Nine out of ten CLA members own properties in the private rented sector, and the majority of these properties will be required to comply with the EPC regulations and subsequently the MEES. Any changes to what is measured on an EPC, and to when one is required will have a measurable cost and administrative impact on CLA members who own and manage properties.

It is frustrating that this consultation, while acknowledging the interaction between EPCs and their methodology and the MEES, does not address all related policy changes in one go. The consultation instead leaves the responsibility of the MEES regulation changes to another team, in another department. This lack of coordination could have a significant impact on the efficacy of the regulations and cause an unnecessary administrative and stressful burden on property owners.

At this stage, the changes are just being consulted on, and there is no guarantee that what is written above is an exact prediction of future regulations. 

We advise CLA members to assess which of their properties may require an EPC, for example those with properties housing long-term tenants with expired EPCs, and those with heritage properties. Because the consultation does not cover the MEES, we are not yet able to say how the changes proposed will impact on those regulations. 

The CLA will respond to this consultation and take advice from its Business and Rural Economy Committee. We will publish our response on the CLA website. 

The government has told the CLA that “The Department for Energy Security and Net Zero is planning to launch its consultation with a MEES plans shortly, and both consultations will be running in parallel for a while so people will be able to consider them together when submitting their responses”.

We will of course update members when the consultation on MEES is published and analyse how the two consultations interact with one another.