The energy efficiency of properties in the private rental sector in the UK is a priority, not just to help meet the government’s net-zero target but to meet tenants’ needs when it comes to their living conditions. The energy efficiency of a rental property can be a deciding factor for a prospective tenant, especially with the current high electricity and heating costs.
This is where an Energy Performance Certificate (EPC) comes in. The general rules on EPCs apply to all privately rented properties, including HMOs, although there are some exceptions. Here, we’ll explain what an EPC is and help you understand the EPC requirements for HMOs.
What is an EPC?
An EPC details how energy efficient a property is. A rating is given between A and G, with A being the most energy efficient and G being the least energy efficient. The approximate costs for the lighting, heating and hot water for the property are included.
Recommendations are included on ways to improve the property’s energy performance and reduce overall consumption. Approximate costs are noted for these recommendations, along with the potential savings to be made on utility bills. Information related to energy performance is also detailed for various features, such as the walls, roof and windows.
How long is an EPC valid for?
An EPC is valid for 10 years so, as a landlord, you don’t need to get one for each new let. If you make changes to the property, however, you may need to have a new assessment carried out as this can change the rating. For example, if you convert the loft, add an extension or add extra bedrooms. If you fit new double glazing, install low-energy lighting, upgrade the heating system or change the insulation, this can improve the property’s energy efficiency. Some lenders offer more favourable mortgage rates for properties with higher EPC ratings so it’s worth upgrading where possible and obtaining a new certificate.
What rating is required for rental properties?
A Minimum Energy Efficiency Standard (MEES) has been set for private rental properties. This means that all rental properties in England and Wales must have a minimum EPC rating of E. If your property falls below this rating, you have to bring it up to standard before renting it out. Alternatively, you may be able to register for an exemption.
What are the EPC requirements for HMOs?
As a house in multiple occupation (HMO) is a rental property, then technically you need an EPC. However, an EPC relates to an entire property and there are various types of HMOs, causing confusion for landlords. As such, guidance was released by the Department for Communities and Local Government, now known as the Ministry of Housing, Communities and Local Government, to clarify when an EPC is needed for an HMO.
This guidance states that: ‘An EPC is not required for an individual room when rented out, as it is not a building or a building unit designed or altered for separate use. The whole building will require an EPC if sold or rented out’.
In that respect, if you are renting out an HMO as individual rooms, including access to shared facilities, such as a bathroom, toilet and kitchen, and each tenant has signed a separate tenancy agreement, then you don’t need an EPC.
However, if you rent out your HMO to a group of tenants who have all signed the same tenancy agreement, then you do need an EPC for your property. Likewise, if your HMO has self-contained flats, EPCs are required for each of those flats.
The rules and regulations for HMO properties are continually evolving so it’s important to keep up to date with them to ensure that you still comply with the legal requirements.
Proposed EPC changes in 2030
The government has proposed an increase to the minimum EPC rating required for rental properties. All rental properties must meet the higher rating of C by 2030. Failure to comply with the current and upcoming regulations can result in penalties. These can include hefty fines and the inability to rent out your property.
How to improve the energy efficiency of your HMO
There are various ways to increase your property’s energy performance. These can include:
- Replacing any single-glazed windows with double glazing
- Fitting draught excluders under the doors
- Installing low-energy lighting
- Ensuring that the roof, walls, floors and loft have adequate insulation
- Upgrading the heating system
- Using smart thermostats and controls
- Using renewable energy sources, such as solar panels
- Choosing appliances with high energy-efficiency ratings
Making changes to your HMO to bring it up to a higher level of energy efficiency can be costly. To allow for this, a cap has been set for upgrades. If the costs to improve your property to the required EPC rating exceed the cap, you may be able to qualify for an exemption. You’ll need to apply to the PRS Exemptions Register.
Stay compliant with EPC requirements
Having an energy-efficient HMO property is beneficial for you as well as your tenants. You can take advantage of more competitive mortgage rates, find it easier to attract new tenants and retain those tenants for longer. Your tenants can enjoy better living conditions and benefit from lower energy bills.
Whether you’re thinking about buying an HMO, converting an existing property into an HMO or already own an HMO property, it’s essential to be aware of and comply with the EPC regulations. Our mortgage brokers are experts in HMO properties and can guide you on your liabilities as an HMO landlord. They can also arrange an HMO mortgage or remortgage that’s tailored to your needs and ensure that your property is protected with specialist HMO insurance. Just give us a call on 01322 907 000 to speak with one of our HMO specialists today.