In recent years there has been an increasing focus – from the government, housebuilders and other stakeholders – to make homes more energy efficient, bringing the twin benefits of lower bills and a positive effect on the environment.
But the main measure designed to increase the energy efficiency of homes – Energy Performance Certificates (or EPCs) – could, in a large number of cases, be inaccurate.
That’s according to a new report by PropTech startup Spec
, which claims that up to 2.5 million EPCs could be wrong due to incorrect measurement standards and practices.
What is an EPC?
Originally introduced in 2007 as part of the now-defunct Home Information Pack, an EPC tells potential buyers and tenants what the energy efficiency of a home is.
It does this by ranking it from A- (the most energy efficient) to G- (the least energy efficient). For anyone selling or renting a home in England, Wales and Northern Ireland, an EPC is compulsory.
As well as offering an indication of a property’s energy efficiency, an EPC will also provide information regarding the home’s typical energy costs and ways of reducing energy use to make the property more efficient.
In 2012, as part of the government’s Green Deal scheme (since abolished), EPCs were simplified and updated to improve their effectiveness.
A certificate is valid for 10 years and a home can’t be sold or let without one. The survey of the property, designed to work out its energy efficiency, will usually take between 45 minutes to an hour, and is carried out by what is known as Domestic Energy Assessors (DEAs). Meanwhile, the Energy Performance of Buildings Regulation 2012 is in place to regulate EPCs.
The cost of an EPC ranges from around £45 to £100, but there is no one set fixed cost, which means consumers are encouraged to shop around and get a number of quotes from various DEAs.
Our guide to EPCs
explains more about who needs an EPC, what it includes and how to go about getting one. There are different rules for properties being sold or rented in Scotland, which you can see in our conveyancing in Scotland
Recent changes to energy efficient standards
From April 1 2018, new minimum energy efficient standards (MEES) came into play in the private rented sector. As a result, landlords granting a new tenancy to new or existing tenants must now ensure that a home has an EPC rating of at least E- before letting it. From April 2020, this will apply to all private rented properties in England and Wales, even where there’s been no change in tenancy.
Anyone renting out a home who does not meet the new minimum standards – in other words, homes with an EPC rating of F- or G- – faces penalties of up to £4,000 (unless they have the right to exemption).
In November 2018, the new rules were tightened further. From April 2019, landlords looking to rent out F- and G- rated properties will be required to upgrade them to band E- from their own pockets.
The cap placed on landlord contributions was announced as £3,500 (up from the previously announced figure of £2,500). If upgrades cost more than this cap, landlords will be able to register for an exemption.
Why are so many EPCs reported to be inaccurate?
The report - Impacts of Inaccurate Area Measurement on EPC Grades -
explored how outdated techniques to measure floor space can have a significant impact on the accuracy of EPCs. The problem, Spec argued, is so acute and so widespread, ‘tens of thousands of landlords may be unwittingly breaking the law’.
The research also claimed to highlight the limitations of the old-fashioned measurement techniques of most Domestic Energy Assessors, with the average discrepancy in property area coming in at 8.6% (or 87sqft).
According to the findings, one in four EPCs record the size of a property so inaccurately that it varies by more than 10% from the true size of the property.
When giving a property its energy rating, floor space is a key component of the calculation carried out by DEAs, with accurate floor space measurements essential for producing an accurate final EPC rating because as little as a 1% change in property area can result in a 1 point change in an EPC score. This, in turn, can modify the overall EPC rating.
Anthony Browne, senior adviser to Spec, commented on the white paper: “Our study reveals that it’s not really a case of if your EPC is measured inaccurately, but how much it is measured inaccurately.”
“Inaccurate EPCs present serious challenges and risks not only to property professionals, consumers and estate agents - but also the environment.”
“It means tens of thousands of landlords are unwittingly renting out their properties, opening them up to the risk of fines of thousands of pounds through no fault of their own,” he said.
What could this mean for consumers?
The obvious consequences of EPCs being incorrect are owners having less clarity about the energy efficiency of their homes and the potential for landlords to unintentionally let illegal properties to tenants.
According to the research, an estimated 35,000 E-rated properties – equivalent to all the households in Harrogate - are being let illegally thanks to EPC scores which would likely be downgraded if the floor space was accurately measured.
The accuracy of EPCs is also vital when it comes to the environment. In the UK, some 27% of all CO2 emissions come from housing, with real estate globally having a significant impact on the world’s total greenhouse gas emissions. As such, there is a responsibility for housing to be as environmentally-friendly as possible, with homeowners reducing their impact on the environment as much as they can.
That was the intention of the EPC in the first place – with improved energy efficiency and savings on fuel bills the top of the agenda – but if these EPCs are proving ineffective, what impact could this have on the environment and the energy efficiency of housing moving forward?
Fewer homes below the minimum standards
On a more upbeat note, the latest government statistics suggest that there were 786,000 fewer E-, F- or G- rated fuel poor homes in 2016 compared to 2010, with this likely to have improved further in the years since as energy efficiency rules have been tightened to a greater degree.
Equally, the number of rental properties with an EPC rating of F- or G- fell from around 700,000 in 2012, to less than 300,000 in 2017, according to research by ARLA Propertymark.
The demand from tenants and buyers for more energy efficient, eco-friendly and better-insulated homes is also there, which should help to continue to drive up standards.
What’s more, 8 out of 10 new-builds
have the top A- or B- rating, with most of these homes built with high energy efficiency in mind.
The government also has ambitious plans for energy efficiency moving forward, with a target of 2030 for all private rented properties to have an EPC rating of C- or better.
With the scrapping of the Green Fund and the higher expenses cap for landlords needing to upgrade their homes, there is an argument that the government needs to do more to help people make their homes more energy efficient.
While the above research is certainly concerning, there does seem to be some considerable momentum behind the agenda to improve the energy efficiency of homes across the UK.