New energy rules can support broker landlord relationships

With the Renters’ Rights Bill (RRB) the most significant regulatory change in decades and likely to have received Royal Assent by the time you read this, it has dominated the conversation and will do for some time.

It is unsurprising then that changes closely related to proposed reform of Minimum Energy Efficiency Standards (MEES) have largely gone under the radar.

After being shelved by the previous Government, proposed changes to MEES were resurrected by Labour’s Ed Miliband, Secretary of State for Energy and Climate Change. A consultation was launched, inviting input on the framework from interested parties, with a separate consultation on broader Energy Performance Certificate (EPC) reform concluding in February this year.  

Changes to EPCs are already live, with the way they are assessed having been updated through the introduction of new, more advanced methodology for assessing energy performance, known as the Reduced Data Standard Assessment Procedure 10 (RdSAP 10).

This sees the recognition of modern technologies and now records elements of the property with greater precision to determine how energy efficient it is. Examples include individual window and glazing details, specific heating systems and whether they have smart controls or not.

Floor area and insulation calculations have been refined to better reflect a property’s thermal performance. The update also corrects previous disadvantages in how heat loss was measured for flats and terraced homes. This will potentially lead to improved EPCs, so is something that will be welcomed by landlords who hold these property types in their portfolios.

While it’s reassuring to note that existing EPC ratings remain valid until expiry, those needing a new assessment - such as when a landlord is selling a property or taking on a new tenancy - will be subject to the revised process.

This may see ratings for some properties shift, benefitting some landlords and disadvantaging others. While the new framework intentionally takes into account the full range of factors that determine how energy efficient a home is, a key consideration is the way homes are heated. For example, homes with older heating systems like gas boilers may see scores fall, while those equipped with heat source pumps could improve.

This will obviously influence the upgrades that landlords make to remain compliant with current legislation that requires properties to achieve EPC E or above before a tenancy commences and, more importantly, any new sustainability-focused standards that will be introduced sooner rather than later.

In terms of how properties are actually assessed, the most notable change is the need to take a more formal approach to documenting energy upgrades.

Improvements such as insulation, heating systems and glazing will only be reflected in an EPC if supported by clear evidence. Without it, ratings may not account for the work done. Informal or undocumented upgrades won’t count, which could lead to lower scores and unnecessary retrofit costs.

While energy assessors will be best placed to provide detailed education on the subject, helping landlords to get a general understanding of the changes and what they mean for them can be another valuable aspect of advice that helps to strengthen broker / client relationships.

 

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