Your home’s EPC rating could end up costing you.

The Energy Performance Certificate (EPC) scheme has been well established on the UK property landscape for some time now. Since August 2007 for properties sold, and since October 2008 for properties rented, all dwellings must come with an EPC indicating its energy efficiency level.

What is a good EPC rating ?

Properties are placed in bands from A to G, with an A rating being the most efficient, and G the least.

In the initial years following the scheme’s introduction, an EPC was largely viewed as yet another piece of paperwork involved in the home-buying process. In more recent times, however, it’s taken on a new importance.

Tackling emissions from UK homes – responsible for about 15% of UK greenhouse gas emissions – will be key to enabling the government hit its climate targets. As such, the UK government wants to upgrade as many homes as possible to an EPC rating of C by 2035, although critics say this deadline should be bought forward to as early as 2028. In any case, it puts the owners of the 19 million UK homes currently below a C rating in something of a predicament, as housing experts now warn that non-energy efficient homes are at risk of becoming unmortgageable and therefore difficult to sell.

Does an EPC affect my property value?

In short, yes. The government’s plans to ensure homes are upgraded beyond a C rating automatically makes those above this level more appealing to would-be buyers as they won’t be beholden to potentially costly improvements. Plus, people are increasingly aware of the money-saving benefits of living in an energy efficient home. Research from moneysupermarket.com shows that the average English home could be worth as much as 14% more if it was upgraded to an A rating.

Does an EPC affect my mortgage?

Currently, no, but that could be about to change. A recent survey by Countrywide Surveying Services found that 71% of property professionals believe valuers should take into account EPC ratings when pricing a property, with 56% stating lenders should reflect EPC ratings in mortgage rates. If this happens, then existing and would-be homeowners could be affected if the property in question has an EPC rating below C.

How does an EPC impact homeowners, landlords and renters?

For homeowners with properties below a C rating, two things are likely to happen. Firstly, obtaining a new mortgage deal could become trickier and potentially more expensive. Secondly, selling the property will become much more of a challenge unless the cost reflects the investment required to get it up to standard. This means homeowners may end up losing money on their property.

The rules apply to owners of rental properties, too, and with tenants becoming increasingly switched on about energy consumption and bills, a poorly-rated rental property will be less appealing, and therefore command much lower rental fees. Plus, rental properties have to be an E or above (with some exemptions).

At this juncture, however, many homeowners remain indifferent to the situation, whether that’s because the proposed changes don’t affect them, or they’re simply unaware of these developments. Recent research conducted by NatWest Group and IHS Markit shows that, of the factors surveyed, consumers placed EPC rating as the third least important factor they considered when they last bought a home and more than a quarter of homeowners say they have no plans to make any sustainability improvements to their home over the next ten years.

What are the benefits of upgrading my property to an EPC C rating?

Having an energy efficient home brings more benefits than a higher property value – you’ll be saving money on bills year on year, too. According to the Department for Business, Energy & Industrial Strategy (BEIS), the average energy running costs for a home with an EPC rating of C in England are around £300 cheaper than for a band D home, and £740 less than for a band E home. Not only that, but with the right efficiency measures in place your home will feel more pleasant, staying warm in winter and cool in summer.

Related: How to insulate your home so your rooms are warm and cosy

How expensive will it be to upgrade my property to an EPC C rating?

This all depends on the type of home you have and its current EPC rating. Upgrading to a C rating could cost a few hundred pounds for something straightforward like loft insulation, to as much as £12,000 to £15,000 for a ground source heat pump, which will become a mainstream means of household heating after gas boilers are phased out potentially in 2033. According to the BEIS, however, the average cost of upgrades will work out at around £4,000.

Related: What you need to know about alternative heat sources

How do I improve my home’s EPC rating?

Given the climate crisis there’s no time like the present to improve your home’s energy efficiency, and the best time to do home improvements is in the warm weather. Your existing EPC will give common improvement recommendations, such as insulation, double-glazing, low-energy lighting and solar panels, as well as the potential costs of undertaking these improvements, and the money you could subsequently save on your bills.  

Not sure where your EPC is? Find your EPC rating online here.

The  government has set its targets with plenty of time to ensure changes can be made at a reasonable pace, and there may be  a funding support programme will be introduced to replace the Green Homes Grant Scheme.

The bottom line

EPCs are going to become an increasingly important part of the home buying and selling process. Even if you’re not planning on selling any time soon, it makes sense to check your current EPC to see where you stand, and consider improvements that could save you time, money and hassle down the line and also cut carbon emissions.

We would love to hear your comments and stories about the issues raised in this article:

 

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