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Why new EPC rules favour new-builds as investment properties

The UK government has legally committed to going carbon neutral by 2050. That’s going to require a huge effort and significant changes across essentially all commercial sectors, including the private rented sector.

Carbon neutrality and the PRS

As a densely-populated country, the energy-efficiency of homes is likely to play a huge role in getting the UK to its target of carbon neutrality by 2050. The government has very little scope to force the owners of private, residential properties to make improvements to them to improve their energy efficiency. They can certainly encourage them, but they cannot force them.


They can, however, force home builders and property investors to comply with minimum standards of energy efficiency as a condition of being allowed to build/let properties and it appears that this is exactly what they intend to do.

The rules on minimum energy efficiency standards are being expanded

From 1st April 2020, all let properties will be required to have an EPC rating of E or better, unless they specifically qualify for an exemption. Exemptions only apply in a very small range of circumstances. These are typically:

+ The work would devalue the property by 5% or more (exemption valid for up to five years)

+ The landlord cannot obtain the necessary permission for the work

+ The work would cost the landlord more than £3,500 (including VAT).

NB: existing cost-based exemptions are only valid until the end of March this year.

A person becomes a new landlord (exemption valid for up to 6 months).

The minimum energy efficiency standards are enforced by local authorities and they are allowed to keep the funds from any fines levied. It’s therefore probably safest to assume that the rules will be enforced with vigour.

The MEES is likely to be increased in future

The Scottish government has already stated its intention to increase the MEES to a D by 2022 and to raise the cap on the amount landlords must spend to meet the MEES from £3500 to £5,000. It seems highly likely that the Westminster government will follow suit. In fact, it is entirely possible that the MEES will be pushed at least as far as C to match the minimum standards expected of new-build properties, many of which are now rated B and some of which are even achieving an A rating.

Even without the MEES, market demand favours energy-efficient buildings

Period properties may look charming, but the blunt fact of them is that a lot of them have serious energy-efficiency issues, which can take a lot of time and money to resolve (assuming the necessary permissions can be obtained). Modern tenants (and many buyers) are therefore increasingly favouring new-build properties, which are, literally, designed and built from the ground up with energy efficiency in mind.

This means that new-build properties not only keep landlords on the right side of the law (both now and in the foreseeable future), but are also easy to market to tenants looking to get the best value for their money.

Mark Burns is the Managing Director of Manchester estate agent Indlu.

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    A fairly simple way to improve the energy efficiency of owner-occupied stock would be to require sellers to bring the EPC rating of their property up to a minimum level, say E, before sale can complete.

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    That is all well and good, but what about listed properties, where you are liable to imprisonment if you desire to change anything.
    Will these remain exempt in the climate change obsessed country in which we now live?
    Certain stone built properties will never reach the 'dizzy heights' that will be expected of them in the future, so are the owners of these properties going to be reported to the 'climate change police', or will they have to be knocked down and rebuilt to the highest energy rating to satisfy the barmy obsession the government et al have on this subject?
    I expect that Buckingham Palace and other like buildings will be exempt from any change.


    In this case of listed buildings, I expect energy efficiency improvements will only be a requirement where they do not alter or adversely affect the character of the building.

    Matthew Payne

    It is not always possible to make improvements either, many have solid walls that cant be insulated for example and you wont be able to change the appearance. Some things would also be too expensive to get a return on in 7 years as well like digging up floors and adding insulation.

    I looked into it, the process is you need to pay to get your local council conservation officer to inspect the property and if they agree you cant make the changes they will give you what you need to register it exempt.

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    Barry, I think all home owners should meet the mees, that's 15 million properties plus, we LL's are only a fraction of the housing stock and expect us to save the planet as well as finance every local Authority in the Country. Mandatory compliance for Home owners as some owners never sell.

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    • 28 February 2020 15:41 PM

    Factor in the costs of remedial works to achieve 5 yearly electrical certs plus MEES requirements and for many LL they'd be better selling these dud properties.
    It will take years to achieve payback.

    Many LL are coming to the end of their investment timelines.
    They'd be better off to start unloading all these dud properties to FTB as no LL will want them.
    Are recently built houses now the sweet spot for LL!?
    All electrics and MEES sorted already!

    All the traditional terrace properties are going to be unviable.
    They need to be at least C status as this will be required in the coming years.
    Best to offload those that will require extensive and costly works to achieve C status.

    Dopey FTB won't know they are being sold a pup!
    Plus they will be limiting their future sales market to other FTB.
    No LL will buy unless at a massive discount to factor in all these very expensive works.
    I presume these works won't be required if short term accommodation or do they apply to any property that is let out whatever letting arrangement is used?

    Could homeowners taking in lodgers be forced to be compliant with these regulations!?

    If so there would be very soon lots of evicted lodgers!!
    Govt seems determined to reduce rental stock of all types
    I just don't get it!!

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    The sad thing is that the "greenies" mostly don't actually understand what is "green". Most Victorian or Georgian properties will outlive the modern "greener" properties several times over, thus saving on high energy consumption activities such as transporting construction materials and labour, manufacturing bricks, steel, concrete, glass, insulation etc. as well as avoiding cutting down atmosphere-cleaning trees. It's the same perverse logic, based on ignorance, which vilifies nuclear electricity generation and 70 mpg Category 6 diesel engines whilst advocating an impossibly swift move to electric vehicles which only push the pollution and fossil fuel consumption back to the power stations, with a significant loss of energy in the transmission and storage processes. These are probably the same people who think Shelter helps the homeless!

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    Very true most terraced houses here in Norwich date around the 1880s, built to last and people who live in them love them, houses built in the 60s are being knocked down, houses being built today will last 50 yrs max, and in 50 yrs time those 1880s houses will still stand and people will still love them. Electric cars are not green, they are also down right dangerous in the event of an accident, these ' greenies' no doubt straight out of uni with a useless degree are truly as thick as 2 short planks, as an electrician said to me recently '' you do not need an education to be clever''.


    Hi Andrew.
    What you are saying is just common sense, but the 'powers that be' seem to be bereft of anything approaching this.
    If the authorities took a long hard look at all the suggestions made by yourself and Robert, they would no doubt come to a sensible conclusion.
    However, they have tunnel vision when it comes to climate change and want to be seen to be doing something radical. Their mandate is not to think it through, but to appease climate change activists who are demanding action now.

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    The biggest problem with the incoming MEES / EPC's is its going to be enforced by the Local Authority's which in itself is not a problem, what is the big problem they are going to be allowed to keep the fines imposed on LL's, it should go to Central Government, so the Prosecutor and the Beneficiary is the Council, conflict of interest for sure so don't expect justice to have any role.


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