Receivership and Recovery Tip: Energy Performance Certificates (EPCs)
February 17 2023The latest tip from our Receivership team
The first reading for the proposed EPC legislation was put in front of Government in June 2022 and the second reading is listed for March 2023.
The proposal is that by 1 April 2025, all newly rented properties will be required to have a rating of C or above. Existing tenancies will have until 1 April 2028 to comply with the proposals.
The fine for not complying will be £30,000 and the current spending allowance before you can apply for an exemption is being increased from £3,500 to £10,000.
Lenders need to see an EPC for every property they lend against and consider whether there’s any risk they’ll be exposed to in the event of a distress situation.
If so, they need to try to ensure that borrowers complete the works necessary to improve the rating and/or adjust loan-to-value ratios. Bear in mind that the nearer the deadlines, the harder it will be to find contractors and the greater the costs.
Energy efficiency works in order to achieve a C rating may relate to loft, wall and floor insulation; some of these improvements may be harder to implement in blocks of flats.
They might also be simple changes such as energy efficient lights or thermostatic valves on radiators.
Most of the recommended work for clients within the Strettons residential management portfolio so far relates to loft insulation at a cost in the region of £1,500 + VAT per property.
