Bringing EPCs up to scratch

An Energy Performance Certificate ("EPC") is a certificate, issued by an energy assessor, which shows information about the energy efficiency of the property to which it relates. It is a multi-functional tool: on a practical level, it helps owners and investors to understand and improve the energy performance of their own properties, and can give prospective buyers and tenants an insight into their likely energy costs. On a regulatory level, the EPC is the means by which the Government mandates a minimum energy efficiency standard for rented properties (with a view to achieving net zero by 2050), and is one of the reference points used by investors to score their portfolios' sustainability.

However, the EPC's shortcomings have been long recognised and were explored in the previous governments 2018 consultation and subsequent EPC action plan. On 4 December 2024, the Government published a new consultation on a set of proposals intended to improve the current Energy Performance of Buildings regime in England and Wales, an overview of which is here. This briefing summarises the document's key proposals.

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Updating EPC metrics

The Government proposes to use multiple metrics on EPCs to provide a more complete representation of building energy performance, rather than the current single headline metric, including:

Energy cost: helping people understand the financial implications of a building’s energy efficiency and make informed decisions about potential improvements;
Carbon: an estimate of the carbon emissions arising from the energy used in the building;
Energy use: offering insights into overall energy consumption and identifying areas for energy efficiency improvements;
Fabric performance: assessing the thermal performance of a building’s envelope and promoting the importance of well-insulated, comfortable, and energy-efficient spaces;
Heating system: providing information on the efficiency and environmental impact of a building’s heating source and encouraging the adoption of cleaner heating technologies; and/or
Smart readiness: assessing a building’s potential to integrate smart technologies that can optimise energy consumption and the ability of consumers to benefit from cheaper smart tariffs.

The pattern of metrics would be different for domestic buildings than for non-domestic buildings. Any changes would happen in 2026.

Refining requirements for EPCs and DECs

In order to improve access to up-to-date energy performance information across a broader range of property types, the Government is considering:

reducing the validity periods for EPCs and DECs from 10 years to a shorter period;
requiring a valid EPC throughout the tenancy period rather than just at the outset;
banning marketing for sale or let without an EPC, instead of continuing the current 28 day grace period;
mandating EPCs for HMOs when a single room is rented out;
mandating short-term rental properties to have a valid EPC at the point of being let; and
requiring all heritage buildings to have an EPC.

Improving data management protocols

The Government proposes to remove certificates marked as cancelled or not for issue from the Register after two years, in order to comply with current Technology Code of Practice guidance; to remove the option to opt-out certificates from the Register; to allow EPC data to be shared for use at the discretion of the keeper of the Register (in compliance with data protection requirements); and to permit data gathered in previous EPC assessments to be available for use in future EPC calculations for a dwelling.

Strengthening quality control

The Government acknowledges that there is scope to increase stakeholders’ trust in EPCs' accuracy and reliability, and therefore proposes to: identify areas where additional training would be useful; assess the value of providing energy assessors optional training for specialisms such as the energy assessment of heritage buildings; and to explore how best to reduce assessor fraud and improve enforcement.

Revising Air Conditioning Inspection Reports ("ACIRs")

To improve compliance, the Government proposes to levy a new penalty charge of £800 for non-compliance with the requirement to have an ACIR for systems with an effective rated output over 12kW. They also plan to redesign and simplify AICRs.

Conclusion

The energy performance of buildings has been a crucial element of real estate ownership, occupation and management since the CRC scheme was opened in 2010 and the MEES regime was introduced in 2018. Following the previous government's 2021 consultation on reforming MEES, it had been anticipated that the next step in the journey to net zero by 2050 would be for all the minimum requirements for landlords letting commercial property to shift to C by 2027 and B by 2030. However, this trajectory was never formally announced, leaving the sector frustrated by the prevailing uncertainty around future energy efficiency targets. It is hoped that this new EPC consultation will be the first step in clarifying the likely direction of travel.

The Government has expressed a hope that a diverse range of interested parties will respond to the consultation by its closing date of 26 February 2025. Please get in touch with us if you would like to discuss the consultation or your response to it.

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