Growing importance of EPCs

When EPCs were first introduced by Gordon Brown’s Labour government in 2007 they were universally dismissed as a bureaucratic waste of time. With rising energy costs, increasing awareness of our carbon footprints and the drive for net zero, things have changed considerably since then. Now buyers, tenants and even mortgage companies pay close attention to a property’s EPC rating and it can have serious implications for both its value and the rate at which you can borrow against it.

What is an EPC Rating?

An Energy Performance Certificate (EPC) assesses the energy efficiency of a property, with ratings ranging from A (most efficient) to G (least efficient). The rating reflects how much it costs to heat and power a property and the associated carbon dioxide emissions. A higher rating means lower energy bills and a reduced environmental impact, making properties with good EPC ratings more attractive to potential buyers or tenants. The national average is currently D, but the typical rating for a draughty old Victorian house is E.

Legal requirements A property cannot be marketed for sale or rent without a valid EPC and, for rental properties, it is a legal requirement for it to have an EPC rating of at least E. If not, landlords must take steps to improve its energy efficiency before marketing it, with improvement costs capped at £3,500.

How Much Do Buyers Care About EPC Ratings?

A recent survey by the Mortgage Advice Bureau reveals that energy efficiency is a top concern for many homebuyers. Approximately 61% of prospective buyers express a preference for properties with good EPC ratings. And those with an EPC rating of C or above are more likely to receive higher offers.

In fact, 29% of buyers now consider energy efficiency to be a determining factor when deciding how much to offer on a property. Furthermore, 17% actively research EPC ratings during their property search, reflecting a growing awareness of the benefits of energy-efficient homes.

This shift in buyer priorities is largely influenced by rising energy costs and a desire for sustainable living. Buyers are increasingly aware that higher-rated properties will likely lead to lower energy bills and a reduced carbon footprint, making them a more attractive investment. Consequently, sellers should prioritize improving their EPC ratings to enhance their property's appeal.

How is an EPC Rated?

To understand an EPC, it’s essential to know how the rating is derived. An EPC is generated after an assessment by an accredited energy assessor. The assessment covers various factors, including:

Insulation: The type and condition of insulation in walls, roofs, and floors. Heating Systems: The efficiency of the main heating system and any additional sources, like renewable energy. Windows: The type of glazing (single, double, or triple). Lighting: The presence of energy-efficient lighting, such as LED bulbs.

The assessor then provides a score out of 100, which corresponds to the A-G rating. The EPC also includes a ‘potential rating,’ showing how improvements could enhance energy efficiency.

How Long Does an EPC Last?

An EPC is valid for ten years. While there is no obligation to obtain a new EPC after making changes to a property, it could affect its rating.

Improving Your EPC Rating

If your property has a low EPC rating, there are several ways to enhance it: Power and heat: Upgrading boilers, adding solar panels and heat pumps. Insulation: Adding or upgrading insulation in the loft or walls can significantly reduce heat loss. Windows: Installing double or triple glazing can prevent heat from escaping. Energy-Efficient

Appliances: Replacing old appliances with energy-efficient models can lower energy consumption. Lighting: Swapping out traditional bulbs for LED lighting can improve efficiency.

Where to Find Your EPC

You can check the EPC rating of a property via the www.gov.uk/get-new-energy-certificate. This online resource allows you to access existing EPCs and understand the energy efficiency of current or prospective homes.

EPCs and Mortgages

EPC ratings can sometimes also influence mortgage affordability. A few lenders will consider a property’s energy efficiency when determining how much you can borrow. A home with a high EPC rating might qualify for a larger loan amount, reflecting lower anticipated energy costs. Conversely, a property with a low rating could lead to a smaller loan due to higher expected running costs.

How Much Does an EPC Cost?

The cost of an EPC varies depending on your location, the type of property and its size, with most ranging somewhere between £50 and £200.

And what about the future?

There has been a lot of criticism about EPCs’ accuracy, so there are proposals for wholesale changes in the pipeline. And, as part of Labour’s ‘Warm Homes’ initiative, from 2030, rental properties will need to have at least a C EPC rating, although the full details have yet to be confirmed.

If you are thinking of buying or selling a property, give us a call at Phillip Arnold Auctions - 020 8799 3880. Or, to see our latest properties visit our website.

Back to News