In late September, the Government made a significant policy shift regarding energy efficiency standards for rental properties. On September 20th, Rishi Sunak announced a departure from previously proposed regulations that would have compelled landlords to ensure the energy efficiency of their properties were at EPC rating ‘C’ or higher.
These earlier proposals, although not yet formally enacted into law, had required Landlords to upgrade their rental properties to attain an Energy Performance Certificate (EPC) rating of C by 2028. As a reminder, the EPC is a rating system that categorises properties on a scale from A to G, with A representing the highest level of energy efficiency and G the lowest.
The reason for abandoning these plans, according to the government, was that the cost of improving the property would likely be passed onto renters in the form of higher rents.
Given the initial deadline of achieving an EPC rating of C within 2 years (2025), many landlords had already begun to make improvements to their properties, such as ensuring air tightness, improving insulation and ventilation and installing greener methods of energy generation such as solar panels. Furthermore, many local authorities had undertaken PAS 2035 Retrofit works to upgrade their housing stock using the retrofit framework.
Under the revised policy framework, the government has also outlined several other key changes related to energy efficiency:
Increased Boiler Upgrade Grant: The Boiler Upgrade Grant will see a 50% increase, raising it to £7,500. This financial assistance is designed to support households interested in replacing traditional gas boilers with low-carbon alternatives like heat pumps.
Postponement of Boiler Bans: The previously planned ban on installing oil and LPG boilers, as well as new coal heating systems, in off-gas-grid homes, will be deferred to 2035. This extension provides relief to homeowners who might have faced significant financial burdens, ensuring they do not have to invest approximately £10,000 to £15,000 in property upgrades within a short three-year span.
Exemptions for Fossil Fuel Phase-Out: A critical exemption has been introduced for the phase-out of fossil fuel boilers, including gas boilers, by 2035. This exemption is intended to accommodate households facing substantial challenges in transitioning to heat pumps or other low-carbon alternatives. It is anticipated to encompass roughly one-fifth of homes, particularly those off the gas grid, those requiring costly retrofitting, or those necessitating significant electricity upgrades.
These policy adjustments, according to the government, reflect a more flexible approach to achieving energy efficiency and environmental goals, offering increased support to homeowners while acknowledging the diverse challenges they may encounter during this transition.