Energy Performance Certificates (EPCs)

Introduction

The European Directive on the Energy Performance of Buildings (EPBD) is a key part of strategies for tackling climate change. Nearly half of all carbon emissions in this country come from buildings. The principle underlying the Directive is to make energy efficiency transparent by the issuing of a certificate showing the energy rating, accompanied by recommendations on how to improve efficiency. The Directive will be fully implemented by the end of 2008.

Under Article 7 of the Directive, any building which is sold, rented out or constructed must have an Energy Performance Certificate (EPC). This must be issued by a qualified and accredited assessor in an independent manner. Once produced an EPC is valid for ten years. The certificate is accompanied by recommendations on how to improve energy efficiency. These do not however have to be implemented. This part of the Directive has been implemented into law in England and Wales by the Energy Performance of Buildings Regulations (2007/991).

Key points

• from 1 October 2008, an EPC will be required whenever a building in the social or private rented sectors is let to a new tenant
• a building can be: the whole of a building; or part of a building where the part
• is designed or altered to be used separately. For residential purposes, 'designed or altered to be used separately' describes a unit that is self-contained, meaning that it does not share essential facilities such as a bathroom/shower room, wc or kitchen with any other unit, and that it has its own entrance, either from outside or through common parts, that is not through another dwelling
• landlords must provide an EPC free of charge to prospective tenants at the earliest opportunity and must provide a copy of the EPC to the person who takes up the tenancy
• the purpose of the EPC is to show prospective tenants the energy performance of the dwelling they are considering renting
• EPCs are valid for 10 years and can be reused as many times as required within that period. It is not necessary to commission a new EPC each time there is a change of tenant. However, once a more recent EPC has been produced for a dwelling, it will always supersede an existing one. Thus, where a number of EPCs are obtained for a property within the ten year period only the most recent one is valid
• an EPC is not required for any property that was occupied prior to 1 October 2008 and which continues to be occupied after that date by the same tenant. However, landlords may commission EPCs for these dwellings if they wish
• the EPC shows two things - the Energy Efficiency Rating (relating to running costs) and the Environmental Impact Rating (relating to the carbon dioxide emissions) of a dwelling. Each rating is shown on an A-G rating scale similar to those used for fridges and other electrical appliances
• the rating is accompanied by a recommendation report that shows how to improve the dwelling's energy efficiency. These two elements together form the EPC and the complete document must be provided to the new tenant. There is no statutory requirement to carry out any of the recommended energy efficiency measures stated in the recommendation report
• EPCs must be produced by an accredited assessor.

General requirements
The landlord must commission an EPC and ensure a copy of it, including the recommendation report, is available free of charge to prospective tenants at the earliest opportunity. As a minimum, this should be when prospective tenants are first given written information about a dwelling or are arranging to view it, and before any rental contract is entered into. A copy of the EPC (rating and recommendation report) must be given free of charge to the person who ultimately becomes the tenant before any rental contract is entered into.

In instances of lettings where marketing activity is initiated pre-October 2008, an EPC is only required if the property continues to be offered for let on or after 1 October 2008.

Where the landlord has an agent, they may be given the task of ensuring that these requirements are met. However, the landlord will remain responsible for any breaches.

Communications
Landlords should bear in mind the most appropriate way of communicating with prospective tenants. Weblinks or electronic communications are acceptable, provided that prospective tenants will be able to access information in this way and consents to receive it in this form. The Landlord should maintain an auditable trail of communication to show: whether a tenant has agreed to receive an EPC electronically; and whether they have in fact received it.

Lease renewal
The landlord is not required to produce an EPC when an existing lease is renewed, only when the tenant changes.

Existing EPCs
If a landlord already has an EPC for a property, for example because it was recently purchased and the EPC was part of the Home Information Pack, this EPC can be used for the subsequent rental. EPCs are valid for 10 years from the date of its production for rental purposes but only for 12 months if it is to be used for a HIPs related sale.

Production of EPCs
EPCs must be produced by an accredited Domestic Energy Assessor (DEA) or a Home Inspector (HI). Home Inspectors are accredited to produce Home Information Packs for private marketed sales, of which the EPC is one element. Dwellings for rent only require EPCs and the associated Recommendations Report. To be accredited, a DEA or HI must be registered with an accreditation scheme. It is the scheme's responsibility to ensure the assessor is competent and that periodic quality checks are carried out on the assessor's work.

The DEA or HI will carry out a survey of a property to gather data about the dwelling and the building fabric, the extent of any insulation, the installed heating and hot water services and the fixed lighting.

As they may be visiting occupied homes, both DEAs and HIs are required to pass a basic Criminal Records Bureau (CRB) check. This requirement applies to inhouse staff trained as DEAs as well as those external to the organisation.

Landlords or DEAs may choose to employ individuals to gather the data needed for an EPC, or it may be more efficient for surveyors or those visiting a dwelling for other data gathering purposes to gather EPC input data at the same time.

The DEA must still visit the dwelling to satisfy themselves that the data is accurate and can be relied upon, unless the EPC is being created using sampling techniques, or it is a revision to account for improvement works and there is sufficient evidence as to the validity of the new data. A CRB basic check is needed for a data gatherer who visits dwellings unaccompanied by either the DEA or the landlord where the dwellings have tenants. If data is gathered during a site visit of a void property this may not be necessary.

EPC creation and lodgement
The energy data is entered into approved RdSAP software to create the EPC. This is lodged on the Domestic Register by an accredited assessor and a hard copy produced. Landlords and tenants can access the EPC via the Domestic Register if they have the property's Report Reference Number (RRN). Input data is recorded as well. For any given address the current and historic EPCs are held and displayed within the Domestic Register.

Enforcement
The local weights and measures authority, which will be the Trading Standards department for the area, is responsible for enforcing the regulations that require EPCs to be produced for rented dwellings. An authorised Trading Standards officer (TSO) has powers to ask a landlord who appears to be or to have been under a duty in the regulations to produce for inspection an EPC and recommendation report if the TSO suspects that an offence has been committed. This might occur, for example, if a prospective tenant complains that they have not been given access to a copy of the EPC, or if the tenant does not receive the EPC when he takes up the tenancy.

If the landlord has failed to provide an EPC to a tenant, or fails to show an EPC to an enforcement officer when asked, Trading Standards can issue a notice with a penalty charge of £200 per dwelling. In addition to paying the penalty notice, the landlord will still have to provide an EPC to the person who has become the tenant. The level of fine and the process for issuing a penalty notice, and challenging once it has been issued is set out in the Energy Performance of Buildings Regulations referred to above.

Dwellings in multiple occupation
Where individual rooms in a building are rented out and there are shared facilities (eg kitchen and/or bathroom), an EPC is not required. This because an EPC is only required on the rental of a building or part of a building designed or altered to be used separately. Renting a room does not meet the 'part of a building' definition.

An EPC is only required for a habitable unit if it is self-contained. This is therefore different to the requirement for Decent Homes inspections, where units which are not self-contained must be individually assessed. Landlords should be aware of this when holding EPC and Decent Homes data in common asset management databases.

Case Study 1
A house or flat is rented by a number of tenants who have exclusive use of their bedrooms but share a kitchen and bathroom. In this case each tenant has a contract with the landlord for the parts they have access to, but not for a whole dwelling. An EPC is therefore not required each time a tenant moves, although one will be required for the whole house if it is sold, rented as a whole or constructed.

Case Study 2
A group of friends rent a property and there is a single contract between the landlord and the group as the contract is for the rental of a whole dwelling. An EPC is required for the whole dwelling.

Landlord and tenant responsibilities
A summary of responsibilities is provided below:

• copy of the certificate: the landlord must provide the whole EPC (including the recommendations report) free of charge to the new tenant
• understanding the running costs: though this is not an obligation, the landlord should advise the tenant that the estimated running costs (a) are based on standardised consumption (number of occupants and hours of heating per day) (b) take into account costs for heating, hot water and lighting only and do not include the cost of appliances and (c) are based on average fuel prices current when the EPC was produced. The running costs could have been estimated up to 10 years previously and will not reflect the higher rates typically paid by those using prepayment schemes
• implementing the report recommendations: there is no obligation on the landlord to carry out any of the measures. Tenants can act on the behavioural advice (eg turning down a thermostat). Typically it is likely to be the landlord who carries out physical improvements
• understanding what the recommendations mean. The potential rating is based on the adoption of all of the cost-effective measures. These are separated into lower cost measures (up to £500) and higher cost measures (over £500). In some cases, adopting a measure may improve energy efficiency but may not be sufficient for the dwelling's energy rating to improve by a whole band
• although a measure may improve the dwelling's energy efficiency, it may not be cost effective for the landlord to replace existing equipment that is relatively new, eg a boiler. Furthermore, even if a dwelling has the potential to be improved, the landlord is under no obligation to do so.
• understanding the Further Measures section: this section includes measures that those who are very keen to invest in energy efficiency may want to consider, but which are considerable investments with long payback times (over seven years). Tenants need to understand what these mean and that it may not be realistic to expect a landlord to install these measures
• for further advice on energy efficiency tenants should be directed to publications by the Energy Saving Trust.

Financial assistance for improvement works
The incentives to install energy efficiency measures are different between the rented sector and the owner occupied sectors. In the rented sector, the tenant has most to benefit from improvements to the energy efficiency of their property (a warmer home, lower bills) but the landlord is likely to be the person who would make (and pay for) those changes. However there are a number of schemes available which may contribute toward the cost of improvements to a building that are designed to increase its energy efficiency. The main ones are outlined below

Frequently asked questions
Q. When do the obligations for rented dwellings come into force?
A. 1 October 2008

Q. Where does the 10 year validity period come from?
A. The requirement for an EPC is driven by the European Union legislation, which includes a provision that the validity period of EPCs should not exceed 10 years.

Q. Can a landlord charge a tenant for the provision of an EPC?
A. It is not permitted for the landlord to charge for the provision of the original EPC. However it is permissible for a tenant who has already received the EPC to be charged for the provision of a copy document.

Q. Is it possible to amend and update an EPC without the need to commission a new survey? A new EPC might be wanted, for example, if a replacement boiler is fitted.
A. A DEA who issues the EPC would need to be satisfied that it accurately reflects the energy performance of the property. The DEA may be satisfied through means other than a full survey.

Q. Is it always the building owner who is responsible for producing the EPC? What if the building owner has no direct relationship with the tenants?
A. Where a tenant sub-lets a dwelling, the responsibility to make an EPC available lies with the sub-leaseholder.

Q. Who has access to the EPCs on the Domestic Register?
A. In broad terms, only an individual who has the unique reference number for the EPC in question, has the right to access an EPC on the Domestic Register. However, the accreditation scheme responsible for the particular EPC, the enforcement authorities and, on an anonymised basis for research purposes, the Department for Communities and Local Government will also have access to the EPCs.

Q. Is it possible to advertise a property before the EPC has been produced?
A. There may be occasions when it is possible to offer a dwelling for rent before the EPC is available. However this should not be the norm. The landlord will be expected to have made contact with a DEA and commissioned the EPC with a view to receiving it within two weeks of the date it was commissioned.

Q. If an EPC is being produced when the dwelling is empty, what impact will occupying tenants have on the accuracy of the energy and environmental ratings?
A. The occupying tenant will have no impact on the EPC ratings, as these are produced using standardised occupancy data (ie number of occupants and hours of heating per day).

Q. What if the tenant wants to buy the dwelling they already occupy? Can I use the same EPC as I used when they took the tenancy?
A. If the tenant wants to purchase the dwelling they rent, the same EPC can be used. This is because it is a non-marketed sale not affected by the HIPs Regulations. An EPC is required but this can be up to 10 years old. However, if the dwelling is also being placed on the open market, the EPC must be no more than 12 months old because it is affected by the HIPs Regulations.

Q. What happens if I need to get an EPC to advertise the property, but I am going to improve before the new tenant moves in?
A. Either explain to the tenant that improvement works were carried out since commissioning the EPC and so the dwelling's energy efficiency rating may now have changed, or commission another EPC after completion of the improvements.

Q. Will I have to issue an EPC if I have a lodger in my house?
A. A letting of a room within your larger household does not constitute a rental of a building or part of a building therefore an EPC is not required.

Q. Is an EPC required under a long term Regulated tenancy where a tenant dies and a partner, member of their family or other individual is able to succeed to the tenancy under the Rent Act 1977?
A. Under such circumstances an EPC is not required.

Q.How much will they cost?
A. The cost of an EPC varies slightly depending on the size and complexity of the property. Linley and Simpson have reached agreement with a regional company, Elite Energy Assessors, to provide preferential service levels and rates for our Landlords as follows:
    £75.00 + vat up to and including 3 bedrooms
    £105.00 + vat 4 bedrooms or more *

* Please note that particularly large or unusual properties may attract a higher charge but we will contact you when the assessor visits to agree the cost in advance