Holiday homes and EPCs: What do landlords need to know?

What is an EPC? 

EPC stands for Energy Performance Certificate. It’s a multi-coloured chart from A to G which shows how energy efficient a home is.  To put this into context, the average EPC rating of a home in the UK is D, with newer properties being rated at C or above. The EPC will tell you a property’s energy use and typical energy costs. If your client isn’t sure what their EPC rating is or if their property holds one, visit https://www.gov.uk/find-energy-certificate to find out. 

How to get an EPC? 

A qualified assessor will inspect the property. They will consider the age, size, and construction of the property as well as other areas such as the heating systems, insulation, and airtightness of the building. The cost of an EPC assessment can be up to £120, and the certificate will be valid for 10 years. Click here to find an accredited energy assessor: https://www.gov.uk/get-new-energy-certificate 

Do you need an EPC for a holiday home? 

Current rules state that a privately rented property requires an EPC of E or above. From 2025 new EPC rules will mean all newly rented properties will require a C or above EPC rating with existing tenancies having until 2028 to comply with the new rule changes. If a holiday home is rented out for a total of four months in any 12 months, you must have an EPC, although the C or above rating does not apply. 

What are the benefits of having an EPC? 

1. Save money: Most holiday let owners handle paying the energy bills. As energy prices are likely to stay inflated even beyond the energy price cap expiry in 2024, savings here will make a big difference to the bottom line. That’s money back into pockets and not bills. Properties with higher EPC ratings can cost between hundreds and thousands per year less to run, and it can increase a property's value by an average of 14%, according to government research (210kb pdf).  
2. Great selling point: Eco-conscious travelling and sustainable living have gained considerable momentum over recent years, accelerated by the Covid-19 pandemic, where data has shown a heightened awareness of environmental issues post-pandemic. With more people seeking to reduce their carbon footprint and international tourism in the EU still 40% less** than pre-pandemic levels, capturing the attention of sustainable tourists and those choosing to holiday at home is a must. 
3. Help save the planet: An EPC band D household produces an estimated six tonnes of CO2 a year. Increasing a home's EPC score will reduce CO2 emissions by a significant amount each year. 

How to increase the EPC of a property? 

There are number of ways to increase a property’s energy efficiency and reduce its environmental impact.  Changes will depend on the property’s current EPC rating. 

1. Install double glazing: an effective way to increase an EPC rating by 5-10 points, prevent heat loss and reduce energy bills. 
2. Increase loft insulation to a minimum of 270mm: inexpensive, easy to install and highly effective way to increase energy efficiency. 
3. Wall insulation: whether a home has a cavity or solid walls, insulating them can improve the EPC rating. 
4. Replace the boiler: an old or inefficient boiler could bring down the EPC rating. Replacing with a new, condensing, energy efficient boiler can drastically reduce energy bills and boost the EPC score. 
5. Low energy lighting: something as quick and simple as switching to energy-saving light bulbs can use up to 75% less energy and can last almost 10 times longer compared to traditional bulbs. 

How much will it cost to improve the EPC rating of a property? 

An EPC assessment will outline recommended measures specific to the property on how to reduce energy usage and increase efficiency as well as an indicative cost of these improvements. The cost will vary depending on the level of investment needed, homes below the EPC rating of C estimate it will take an average of £10,400 per property to get them up to standard, although for many the cost will be considerably less. 

How can Hodge help  Investing in a holiday let to make it more energy efficient is a fantastic way to increase its worth, reduce utility bills and maximise it appeal. The outlying cost may be a significant sum and additional borrowing may be needed. If your client would like to borrow money on their mortgage, we may be able to help. Find out all you need to know and how to get in touch here:  Additional Borrowing - Hodge for Intermediaries (hodgebank.co.uk)

* According to Sky Cottages Staycation index report
** https://www.weforum.org/agenda/2022/03/europe-tourism-has-slow-pandemic-recovery/

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