EPCs as they stand have been slammed by MPs and property experts alike. But Energy Performance Certificates are still seen as a powerful means of tackling inefficient buildings in the UK, so there is a growing recognition that reform is needed.

The Government’s Environmental Audit Committee recently collected the combined gripes of many property and sustainability experts, all of whom agree: the way the rating in the Energy Performance Certificates (EPC) is calculated, based on standardised data, leads to anomalies in its representation, focusing as it does on cost, not the real-life energy usage and performance of running a building. 

EPCs surveys and performance ratings were derived primarily as a cost-based rating system, and while they do generate some useful insights, in their current implementations the algorithms used produce some inaccurate assessments.

Lowered EPC ratings

Inconsistencies in the existing EPC calculation mean that property owners can currently pay out thousands of pounds for work that, when they come to sell, they find actually lowered their EPC rating.

The energy sector has been scathing about the system. The EPC rates buildings from A to G but experts are saying the current system is 'not fit for purpose'. This is because the rating is based on the cost of energy used, not on the actual carbon emitted into the atmosphere. 

It results in a system that punishes people for installing heat pumps because they use more electricity and LPG gas because it's more expensive than natural gas - it incentivises the use of mains gas over electricity or LPG.

Tom Spurrier, of the UK Green Building Council, a leading industry body, has said:

'We have currently got a metric that incentivises gas because it is cheaper.' If you install a heat pump, which is powered by electricity, your EPC rating may actually fall. Properties with Liquid Petroleum Gas (LPG) are also marked down because the gas is more expensive than mains gas.

Scrapped targets

The government has scrapped its targets for EPC rating increases for rental properties. Under the original proposals, landlords had to have an Energy Performance Certificate (EPC) rating of C or higher, with a target date of all new tenancies by 2025, followed by all tenancies from 2028.

All of these EPC changes have now been abolished and the Government has said it will encourage landlords to upgrade the energy efficiency of their properties, where possible.

Shawbrook study

Given the expense of upgrading many of the older property stock, typically used as rental properties, many landlords will be relieved that they have been given breathing space to plan these improvements. One study by Shawbrook Bank however found that 80% of landlords were already planning and prepared for the original 2025 deadline. Nearly 50% of the landlords surveyed had already spent money on improving their properties over the previous year. The study found that the average amount spent was around £25,000, or £37,164 for London-based landlords.

With the election cycle coming to an end, and with one to take place no later than 28 January 2025, but more likely in 2024, the Government has no plans to reintroduce the EPC targets. But this is unlikely to remain the same with a new Government in power, especially under Labour. 

With those large numbers of landlords having invested in complying with the new rules as the targets stood, it still makes sense to plan for the future – there are still good reasons for improving the energy efficiency of your rental properties.

EPC Action Plan

The Government is well aware of the deficiencies of the current EPC regime, but progress on reform has been painfully slow following a consultation exercise and Action Plan carried out in 2018 – see Improving Energy Performance Certificates: action plan - progress report

The BRE report

The Building Research Establishment (BRE) has recently put its considerable weight behind the call for improvements in the EPC system. BRE has said that “Reforming Energy Performance Certificates (EPCs) to be net zero-ready will speed up the decarbonisation of the UK’s built environment.”

Their report – Energy Performance Certificates: Enabling the Home Energy Transition – outlines how EPCs for existing homes need to develop to make them more useful for homeowners. BRE’s report presents ideas for their development and delivery to ensure they are ready for the transition of our homes to net zero including these recommendations:

• The ten-year lifespan of an EPC is too long. “With major changes planned to the way we use energy in our homes, the report argues that an EPC should be valid for five years to provide more up to date advice and information for homeowners.”
• The current headline EPC rating is based on the cost to heat and light the home. “While this will remain an important metric to report on the certificates, moving to a new set of headline ratings is key, including a stable measure of energy efficiency.”
• The Government should enable more of the detailed data collected to produce an EPC to be used to plan retrofit, while respecting homeowners’ privacy and data protection.
• More rigorous training is needed for those EPC Energy Assessors who visit properties to collect the data for EPCs. They play a crucial role in ensuring accuracy. “A review and strengthening of the training and continuous professional development requirements for domestic energy assessors could build trust and confidence in the system and ensure that assessors can help drive the net zero transition of our housing stock.”

The Building Research Establishment says that 40% of homes do not have an EPC. 

“Often these are the least energy efficient homes which have not been recently improved or changed hands. Official development of a provisional EPC rating for these homes could help local authorities and homeowners to identify retrofit opportunities and plan grants and support.”

In 2022 BRE found that just 5% of people had used the advice on the certificate to improve their home. By making EPC advice and guidance more meaningful and directly useful, the EPC could become a much more widely used and trusted tool.