What is an EPC and why is it required?

An EPC assesses a property's energy efficiency, rating it on a scale from A (most efficient) to G (least efficient). This rating gives landlords, tenants, and buyers a clear understanding of how efficiently a property uses energy, its likely energy costs, and recommendations for improvement.

Under the Energy Performance of Buildings (England and Wales) Regulations 2012, landlords are legally required to provide an EPC when letting or selling a property. This obligation ensures that prospective tenants or buyers have access to the property’s energy efficiency information before making decisions.

For rented properties, meeting the minimum energy efficiency standards is a key consideration. The current minimum energy efficiency rating required for letting is E which is likely due to change in upcoming updates to the minimum targets landlords are set for the energy efficiency of their properties. Properties with a rating of F or G cannot be legally let unless an exemption has been registered. This requirement is part of ongoing efforts to improve the energy performance of housing stock across the country.

Failing to meet the legal requirements for an EPC can lead to financial penalties. Landlords who let properties that do not meet the minimum energy efficiency standards may face fines of up to £5,000 per breach. For this reason, understanding whether an EPC is required, and ensuring compliance, is an integral part of property management.

Providing an EPC also offers practical benefits beyond legal compliance. The certificate gives clear insights into a property’s energy efficiency rating, helping landlords identify cost-effective improvements that could make their property more attractive to tenants. This is especially important as tenants increasingly prioritise energy efficiency due to rising energy costs.

Legal exemptions to EPC requirements

Although most landlords need to obtain an EPC, certain properties and circumstances are exempt from this requirement. Below are the recognised exemptions and the situations they cover:

• Temporary buildings: properties intended to be used for less than two years are exempt. Examples include site offices, temporary classrooms, or similar structures.
• Small standalone buildings: buildings with a total usable floor area of less than 50 square metres that are not connected to a larger dwelling do not require an EPC. This typically applies to outbuildings or small commercial units.
• Listed buildings: listed buildings are often exempt if meeting EPC energy efficiency standards would alter their character or appearance. However, not all listed buildings qualify for this exemption, particularly if energy improvements can be made without affecting the building's features.
• Religious buildings: buildings used exclusively for worship or religious activities are exempt from the EPC requirement.
• Buildings for demolition: if a building is due for demolition, landlords may not need to provide an EPC. To qualify, the landlord must show evidence, such as planning permission or an agreement that the site will be redeveloped.
• Short leases: properties let for less than six months, with no provision for renewal or extension, are not required to have an EPC. This can apply to certain short-term rental agreements.
• Holiday lets: holiday lets rented out for less than four months in a year or operated under a licence to occupy are usually exempt. Landlords should review the terms of use carefully to determine if this exemption applies.

For more information about when an EPC is not required for residential property and commercial property, AST Assistance can provide guidance.

Documentation and evidence for exemptions

When claiming an exemption and applying for the EPC exemption register, landlords must be ready to provide comprehensive documentation that supports their claim. This documentation demonstrates compliance with legal requirements and ensures landlords can justify their exemption if questioned.

For example, landlords applying for an exemption based on a planned demolition need to provide planning permissions or official documents confirming the intended redevelopment. Similarly, if the exemption relates to a listed building, evidence of the building's status or heritage protections should be included. This is especially relevant when making energy efficiency improvements would unacceptably alter the property’s character.

Other scenarios require different records. For exemptions based on short-term tenancy arrangements, lease agreements demonstrating the tenancy's temporary nature are necessary. In cases of holiday lets, landlords should maintain records of rental activity or licences to occupy, showing that the property is used for less than four months per year.

It’s important to remember that even when exemptions apply, having a valid Energy Performance Certificate for other properties in a portfolio remains a requirement. Keeping records for exempt properties alongside EPC documentation for non-exempt properties helps streamline audits and compliance checks.

Additionally, landlords should recognise the value of assessing whether energy efficiency improvements could bring non-exempt properties in line with minimum energy efficiency standards. While exemptions may relieve some compliance pressures, adopting a proactive approach to energy performance can enhance the overall appeal of a property portfolio and potentially reduce future costs.

Maintaining accurate and up-to-date documentation for both exemptions and valid energy performance certificates is a practical way to avoid disputes and meet legal obligations with confidence.

Implications of claiming an exemption

While claiming an EPC exemption can reduce administrative work, landlords should consider the potential consequences before proceeding. Properly understanding the implications of an exemption helps landlords avoid complications and ensures properties remain attractive to tenants or buyers.

Legal risks

Misapplying an exemption or misunderstanding its criteria can result in penalties or disputes. For example, a listed building exemption may only apply if implementing energy-saving measures would unacceptably alter the property’s character. Similarly, properties such as non-residential agricultural buildings or industrial sites might fall under exemptions, but landlords must still demonstrate eligibility through appropriate documentation. If challenged, landlords could face fines if their exemption claim is deemed invalid.

Marketability

Properties without an EPC may be less appealing to tenants or buyers, especially as awareness of energy efficiency grows. Tenants often consider the impact of energy bills when choosing a property, favouring those with strong energy performance. Landlords who rely on exemptions, such as for industrial sites or non-residential agricultural buildings, should evaluate whether providing an EPC could enhance their property's appeal.

Ongoing compliance

Exemptions are often conditional or temporary, requiring landlords to stay up to date with their obligations. For example, exemptions linked to demolition or redevelopment projects typically require ongoing supporting evidence to remain valid. Landlords with exempt properties should be prepared to reassess their position if circumstances change, such as when a property transitions to residential use or when energy-saving upgrades become feasible.

Claiming an exemption can be an effective way to meet legal requirements, but landlords should balance this with considerations around compliance, tenant interest, and the long-term management of their properties. Seeking professional advice can also help landlords determine whether exemptions are the best option for their portfolio.

How to register an EPC exemption

For rented properties, exemptions must be registered on the Private Rented Sector (PRS) Exemptions Register. This process involves:

• Creating an account: landlords must register on the PRS Exemptions Register.
• Submitting evidence: supporting evidence must be provided, depending on the type of exemption. For instance, listed buildings may require confirmation from a conservation officer, while demolition projects might need planning documents.
• Monitoring exemptions: most exemptions are valid for five years, after which the landlord must either update the exemption or provide an EPC.

Common misconceptions about EPC exemptions

Some landlords may assume that an exemption applies in situations where it does not. Below are common misunderstandings:

• Listed buildings: many landlords believe all listed buildings are exempt. However, if energy-saving measures can be made without altering the building’s character, an EPC may still be required.
• Short-term tenancies: only leases shorter than six months with no renewal clause qualify. Rolling contracts or assured shorthold tenancies generally do not fall under this exemption.
• Owner-Occupied Properties: if the property is being sold without tenants, an EPC is still required.

Understanding these nuances can prevent accidental breaches of regulations.

Seeking professional advice

Understanding EPC requirements and exemptions can be complex, particularly as regulations may change over time. Landlords who are uncertain about their responsibilities can benefit from professional guidance to avoid unnecessary fines or disputes. Speaking to specialists in property law or energy efficiency is often the most effective way to confirm whether a property meets the legal standards or qualifies for an exemption.

For landlords with larger portfolios, keeping up with EPC requirements can become increasingly time-consuming. In these cases, developing a tailored compliance strategy is worth considering. A focused approach can help landlords manage documentation, assess their properties’ energy efficiency, and identify any necessary improvements. This reduces the risk of oversights that could lead to penalties.

AST Assistance offers dedicated support for landlords, including clear guidance on EPC requirements. Their team of specialists helps landlords understand their obligations, determine whether exemptions apply, and implement practical solutions to maintain compliance. Whether you're managing a single property or a larger portfolio, AST Assistance can simplify the process, helping you stay informed and compliant while focusing on running your business.

By working with experts who understand the challenges landlords face, you can make well-informed decisions that align with current regulations and improve the long-term management of your properties.

Call us now on 01706 619 954 or fill out our contact form and we will get in touch at your convenience.