Mastering The Power Of The EPC For Your Property
Purchasing property is, for many of us, one of the largest decisions we make. Whether that’s choosing the right location, deciding on décor, or simply choosing the future of whatever you might decide to do with property, it’s often a string of puzzling choices.
EPCs, or Energy Performance Certificates, are often viewed as just another headache on the road to securing a home or business venture. But did you know that they’re actually crucial in organising yourself, and are only set to become more important going forward?
With an ever-growing portfolio of properties, we’ve developed a comprehensive understanding of their importance, and we wanted to bring that expertise to a much wider audience. We’re seeking to dispel the myths and uncertainties that can often mar the process of getting into the property sector.
With this newest article, we’ll be delving deep into what an EPC is, why it’s becoming much more of an important consideration going forward, and what it means for entrepreneurs, businesspeople and those already in the property industry.
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What Is An EPC?
An Energy Performance Certificate, usually just shortened to EPC, is an official document that rates properties by their energy efficiency. It is, at this point, quite a standardised process – the roots of the EPC scale date back as far as 2007, and it’s been universally adopted across the UK.
EPCs generally contains information that relates to how energy-efficient a property is. It’s also designed to highlight any potential areas where a property could be wasting energy through inefficient measures. There’s a huge range of issues that could be encompassed within that, but some of the more common ones include:
Improper cladding around pipes and heating implements
With this in mind, a property is assigned a letter-based score between A and G (think the old GCSE grades), where an A-rating is as efficient as it’s possible to get, while a rating of G is as an inefficient as it’s possible for a property to be.
This is usually ascertained through a comprehensive report. An assessor will visit your home, and measure your energy efficiency against several key metrics, including lighting, heating, windows and radiators.
It’s then entered into the government’s database, which allows you to search by postcode or street address. This was something that was first introduced as part of the initial roll-out back in 2007, and has only been reinforced over time.
They’ve stereotypically not been too important in a purchaser’s decision – you’ll see it tucked away on most domestic property listing sites – but they’re quickly playing more of a pivotal role in the purchasing decision. Let’s look at why that is.
3 Reasons Behind The Increasing Importance Of EPC Certificates
There’s been a noticeable shift towards a greater importance placed on the EPC initiative in recent years, and for good reason. Here’s just 3 of the core driving factors behind that increased focus, and what they might mean for investors, homeowners and anyone looking to get on the property ladder.
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#1 – A Greater Focus On Environmental Initiatives
It’s no secret that the environment has taken centrestage in business proposals and focus going forward. Our recent exploration of the guiding principles of ESG explores this in much greater depth, but suffice it to say that it’s fast becoming a huge part of considerations going forward.
That’s down in large part to the 2050 deadline for net-zero. It’s taken a few nudges in recent months – new legislation and delays are all inevitable in such a pivotal move – but the central pillars remain strong, and the latest signs show that we’re still on track to reach that goal on schedule and in a sustainable way.
By their nature, the EPC scheme is one of the more environmentally-friendly. All of the certificates are stored centrally on a government database, meaning there’s limited-to-no paper involved, plus with the advent of digital signature services – something we’re intimately familiar with thanks to the flourishing successes of eSign – there’s already precedent for a fully digital experience.
As we creep closer to that mid-century point, you’re only likely to see more and more people accept that as part of the plans for the UK in the near future. We’re a growing nation, and as more and more people reach the age where they’re looking to invest in (or purchase) property, environmental credentials become ever more crucial.
We’ve seen this firsthand as our portfolio of properties has continued to grow. More and more renters, buyers and investors are making savvier decisions – a change that we only view as a positive one – and for good reason.
Figures are already emerging that show the extent of how energy prices have skyrocketed in the last decade. In fact, those same stats from the ONS point towards the strain everyone is feeling, with 4 in 10 choosing to consume less power wherever possible.
A better EPC rating, and by extension a more energy-efficient property, is a vital consideration for consumers, then. Plus, as we’ll look at in our next point, there’s soon to be more legal implications surrounding the presence of EPCs.
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#2 – It’s A (Changing) Legal Obligation For Landlords
You’ll likely already be familiar with some of the legalities behind EPCs. Since October of 2008, any rental property must have an associated EPC certificate – it’s all part of the transparency and clarity needed for potential renters and purchasers.
However, those requirements have changed in recent years, with the first major adjustment coming in April 2020. This meant a property that’s covered under the Minimum Energy Efficiency Standards (MEES), that is set to be sold or rented, must be at least an E-rating on the Energy performance scale.
There are certain exceptions, but for the vast majority of properties (excluding certain rural dwellings, or older property types like cottages), if the EPC rating is below E (so F or G), you’ll be unable to sell or let it out before making the suggested upgrades.
These could be major-scale changes, like room-in-roof insulation or solar panel fitting, or smaller yet no-less-impactful adjustments like swapping out lighting for more energy-efficient LED lighting. You’ll receive a detailed report as part of any EPC inspection.
This was due to change in 2028, with proposals swirling for an updated minimum EPC level of C – which would’ve likely been a challenge for many property owners looking to sell on or rent out. It was designed to be included as part of governmental regulations to help lower carbon emissions, make homes more energy-efficient, and ultimately take steps towards net-zero.
That proposal came in addition to an increasing fine for landlords and property rental companies that don’t comply with that minimum level of energy efficiency – moving from its current ￡5,000 penalty to a startling ￡30,000 in 2028.
These proposals have since been shelved, though, with the government citing issues with funding and practicability. This means that minimum energy ratings aren’t set to change, but this does not mean that there’s no reason to put plans into place for a better, more energy-efficient property, especially for those who’ve already invested in property as we have.
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#3 – There’s Much Greater Revenue In Energy-Efficient Properties
For many property investors and landlords, the bottom line is ultimately what they’re there for. Of course, there’s an obligation to do right by whomever buys or rents your property, and to offer an exceptional level of service, but real estate is an undoubtedly profitable, attractive prospect for those looking to flip.
The great news here is that a better EPC rating has a drastic effect on the price of your property, especially if you’re looking to resell in the near future, or you’ve got plans to rent in a highly desirable area.
Research from the price comparison site MoneySupermarket highlights just how dramatic an increase that can be, with different regions of the UK seeing different increases to their property values.
For instance, an improved EPC in the South West of England saw an average rise in price of over ￡19,000, with the West Midlands seeing an increase of around ￡18,000 and the North East an equally high ￡16,500.
In fact, although the South East and London don’t see an improvement, every single area of the country outside of those regions shows a marked improvement in the price of property that has an improved EPC rating. Rental properties show a similar rise, too, with landlords able to demand more from renters when they’ve got an improved EPC rating.
That tracks. A study from consultancy firms McKinsey and NielsenIQ found that, across multiple different industries and sectors, more than 60% of customers were willing to pay more at businesses that have a track record of sustainability practices (or those that proudly display their eco-credentials).
It translates to the bottom line too, with that same report brandishing the headline that companies who have strong eco-friendly claims saw 28% cumulative growth in the last five years, compared with 20% for those who didn’t have (or didn’t claim to have) those same environmentally-friendly policies.
All of this just goes to show the cruciality of not just an EPC certificate in property, but one that shows just how committed to the future you are.
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Constructing A Better Future For The Property Industry
Ultimately though, a better EPC rating is a way to create a better future, and build in sustainability, eco-consciousness and a sense of what’s best for the planet and its inhabitants into everyday life. That’s crucial for any kind of property, but especially so in the rental market – you have the opportunity to spread that mission.
That’s only set to increase in the future. While plans for a mandatory “C” EPC-rating on all properties have been scrapped in recent years, there’s nothing to say that this won’t be something that reemerges in the future. In fact, we’d actually be advocates for it – it’s a step in the right direction for the environment, for homeowners and renters, and for property businesses.
Plus, as environmental technology becomes much more widely available (look at the huge adoption of solar panels in the last decade or so, for instance), there’s likely to be a much more concerted shift towards tech and initiatives that are designed to improve the impact we all have.
For us, that can’t come soon enough. We’ve continually worked on improving the carbon footprint of businesses from all sectors, not least through Tariff, our dedicated energy switching service. A cleaner, greener future is in all of pipelines, and that’s especially true for the property industry.
We’re taking that onboard as our property portfolio grows in both its scope and its size, and embedding plans to ensure that, no matter what new green initiatives come to the fore, that we’re always at the bleeding edge of all that we do.
With greener homes comes a greener lifestyle, and as representatives of the property sector, we owe it to everyone we serve – whether that’s tenants, homeowners or visitors – to lead the charge in creating a more sustainable future for all.