8 Benefits of a High EPC Rating
Why a high EPC rating is beneficial.
- Understanding EPCs
- EPC regulations
- Exceptions to EPC regulations
- The 8 benefits of a high EPC rating
Understanding Energy Performance Certificates (EPCs)
An Energy Performance Certificate (EPC) is required by law to be provided to buyers of property within the UK. Landlords also have to provide EPCs to their tenants.
An EPC on your property provides the following information:
- The energy efficiency of the property
- The environmental impact of the property. Your property will be graded from A to G, with A being the best rating possible.
Since 2018, buy-to-let (BTL) properties have been required to have a rating of at least E and above.
By the 1st of April 2020, the MEES (Minimum energy efficiency standards) state all current tenancies within the UK must also be at least a rating of E.
The Homes Act will come into effect on the 20th of March 2019. This act will allow tenants the right to sue their landlords over a cold or damp property.
Exceptions to EPC Regulations
There are exceptions to the EPC regulations:
Properties which will be down-valued by over 5% from increasing their efficiency will be exempt from the MEES rulings, along with properties which could be damaged from the process of increasing efficiency and performance.
Find a Surveyor
If you are wondering where, or how to, obtain an EPC surveyor, Rics Firms have an effective tool to search for a surveyor near you.
Benefits of a High EPC Rating
Not only will increasing the energy rating of your property help the environment, but there are also financial inscentives which can benefit you as a landlord. If you are a tenant or a property owner, these points will also be relevant you.
Below we discuss the following 8 benefits of having a high EPC rating:
- Cheaper mortgage
- Reduced monthly bills
- Value increases
- Monthly yield increases
- Lifespan increases
- Tax reliefs
- Less turnover of tenants
- Peace of mind
1. Cheaper Mortgage
A higher EPC rating on a property will, in the majority of cases, lead to a cheaper mortgage rate.
Bank Underground concluded from research that properties with a higher energy efficiency were less likely to fall into arrears. These findings are confirmed by the mortgage data provided by banks – Mortgage rates are on average lower on properties with a high EPC rating.
2. Reduced Monthly Bills
In addition to the fact that your monthly mortgage repayments will be lower each month from living in a highly energy efficient property, you will also spend far less on heating and electricity bills each month.
In the table below, we can see that tenants/residents can save on average over £1100 per year on energy costs by taking their property from a G to E rating.
It is thought that around 40% of properties are able to do this by simply installing loft insulation.
|Energy performance rating|Average annual energy bill (£)| |--|--| |G|2860| |F|2180| |E|1710|
3. Property Value Increases
If you are considering selling your property then improving the energy rating will also likely improve the capital value.
4. Monthly Rental Yield Increases
In line with an increase in value of the property, you may be able to raise the monthly rent of the property.
You will make slightly more in rental income each month, and your tenant will pay less overall each month – their electricity and heating bills won’t be as high. It’s a win-win!
5. Property Lifespan Increases
A well insulated property with no leaks in the roof or walls accompanied by a good ventilation system, will experience far less condensation and damp patches.
This will save you, or a tenant, money overtime due to reduced heating costs.
You will also spend less on repairs – Walls and ceilings will not be damaged from damp and mould build up.
6. Tax Relief
Currently, you won’t actually benefit from tax relief for having a higher energy efficient property.
However, the government are considering lowering tax bands for properties which have energy saving measures and appliances – If you increase your properties efficiency now, by the time the tax changes come into effect, you’ll be saving money immediately.
7. Less Tenant Turnover
If your property benefits from a good energy rating, it will be more attractive to prospective tenants. Tenant turnover may well be reduced.
Ensuring your tenants are happy is of upmost importance. For example, if you owned a business producing a certain product, you wouldn’t sell sub-par and defect products, otherwise you would have unhappy customers who wouldn’t come back.
Treat your tenant like a customer and provide them the best possible living conditions.
8. Peace of Mind
On average, each household in the UK uses around 9 kWh of electricity each day. This equates to a total UK consumption of 244,800 MW of electricity… each day!
To put that in perspective, one wind turbine generates around 36MW of electricity every 24 hours – if the wind is blowing the entire 24 hours.
If you are at all concerned about the impact of humans on the planet, increasing your properties energy efficiency is an ideal place to start. Thus reducing your own carbon emissions and providing you more peace of mind.
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