EPC requirements in Scotland are changing and all private landlords here need to ensure that they, and their properties, are compliant. But, at first glance, EPC requirements in Scotland and the legislation concerning rental properties can be a wee bit on the confusing side! So, here’s a break down of everything landlords need to know.
What are EPCs and why do rental properties need one?
Anyone renting out a property or selling a property is required to have a current EPC.
Chances are, if you’re already a private landlord, you’ll know what we’re talking about. But, for anyone new to the private rental market, let’s start right at the beginning – EPC stands for Energy Performance Certificate. An EPC certificate is designed to show how energy-efficient a property is, on a scale of A (very efficient) to G (inefficient), with a chart much like the multi-coloured energy efficiency stickers you’re used to seeing on new appliances.
The certificate also includes the property’s Environmental Impact Rating, in a chart showing the effect of the property on the environment, in terms of carbon dioxide (CO2) emissions. The higher the rating, the lower the impact on the environment.
So, an EPC gives tenants or buyers an indication of the likely costs to heat, light and maintain their home. In addition to the current ratings, an EPC will show recommended improvements that can be carried out to improve the property’s energy efficiency and environmental impact, and the potential ratings, energy savings and cost savings which could be achieved.
What are the EPC requirements for rental properties in Scotland?
The Scottish Government has proposed new legislation to introduce minimum EPC standards for the private rental sector. Their aim is to improve energy efficiency standards to help reduce greenhouse gas emissions, while ensuring that tenants can enjoy homes that are warmer and cheaper to heat.
The Scottish Government plans to introduce the regulations from 2025, with EPC requirements for rental properties in Scotland as follows:
- any property marketed for private rent as of 2025 must have an EPC rating of C or above;
- all properties actively rented in the private sector must have an EPC rating of C or above by 2028.
Exemptions will be allowed where it can be demonstrated that reaching EPC C is not cost-effective or technically feasible.
The Scottish Government had first proposed that all PRS properties should have an EPC rating of D by 2025. The updated proposals above replace this policy, pushing back the deadlines in recognition of the significant impact of the Covid-19 pandemic. So, if you see reference to all properties and 2025, don’t panic!
What else do landlords in Scotland need to know about EPCs?
You already know that all rental properties in Scotland require to have a current EPC – but did you know:
- energy performance certificates are valid for up to 10 years;
- if a landlord makes a significant improvement to their property during this 10-year period, they can have a new EPC survey carried out to allow them to advertise a more energy-efficient property;
- EPCs in Scotland may only be produced by organisations approved by the Scottish Government and listed on the Scottish EPC Register;
- EPCs must be displayed in the property and the energy performance rating must be included in all advertisements for a vacant property;
- you could be fined a minimum of £500 if you do not provide an EPC when selling or renting a property, or if you don’t include the property’s energy rating when advertising;
- EPC ratings from A – G correspond with a numbered ‘SAP’ rating too, from 1 (inefficient) – 100 (very efficient); this Standard Assessment Procedure is the only government-approved system for assessing the energy rating;
- there may be financial assistance available to help you improve the energy efficiency of your rental properties – Home Energy Scotland can advise.What should you see on your EPC?
What should you see on your EPC?
Energy performance certificates contain a lot of information – so we’ll take a deep dive into the document and each section.
Not all EPCs look the same. In this article, we’re using a 2017 certificate as our example. Certificates dated before this time may have most of this information, although they have a different layout. It’s also helpful to note that EPCs in Wales, England and Northern Ireland have moved to a new format, which is different to this example, which is from Scotland.
Current and potential energy costs
Your EPC starts with a chart showing an estimate of the current and potential energy costs of the property for lighting, heating and hot water, so you have an idea of how much a new property will cost to run. This is an important factor for many tenants, particularly now with the cost of living crisis, and the chart makes it simple to compare several properties.
This chart also suggests how much lower the running costs could be if the energy efficiency rating was improved. In our example, the possible savings add up to nearly £4,000 over three years in this three-bedroom semi-detached house.
Energy efficiency rating chart
The following table on page one is a clear visual comparison of property performance, like the energy labels you get on household appliances. Some EPCs also have a similar chart for a property’s environmental performance.
These charts also show the possible rating if you carry out all the suggested improvements. In this instance, you can see that the property could increase its energy efficiency from a band F to a band B by completing all the suggested energy efficiency upgrades.
The recommended actions are laid out in a separate table:
The second page of your EPC report gives you a comprehensive breakdown of each section of your property, with a description and an energy rating from one to five stars to help you understand the efficiency of its construction, lighting, heating and hot water systems. This is especially useful for comparing with other properties if you’re considering buying another investment property, and for tenants comparing rental properties.
Our example has an efficient heating system and some roof insulation, but there’s lots of room for improvement.
Your home’s heat demand
This section looks at how much heat you’re expected to use in the property and how you can reduce this demand by upgrading the insulation.
Now, we come to perhaps the most important and valuable section of the EPC: the recommended improvements. Here you get a full breakdown of the recommended actions, costs, savings and how much each measure could improve the property’s energy efficiency rating. These can range from something as simple as replacing old light bulbs with new, more efficient LED ones, to adding internal or external wall insulation.
The recommended measures are shown in order of importance, and the energy efficiency improvements figures assume that all the listed improvements are completed, in the order listed. Of course, you might not be able to complete them all, or in the order listed, but it’s a good guide.
The number of actions listed will vary by certificate, depending on which measures are applicable to your property. In our example, the top priority is wall insulation, and if the landlord/homeowner is fully committed to bringing the rating up to a B, the checklist also includes the installation of solar PV panels.
It’s worth noting here that not all recommended measures may actually be possible within properties, for example, if the building is in a preservation area or is listed.
Let’s look a bit closer at a few examples from this table of recommended measures:
- For the recommended internal or external wall insulation, the indicative cost is £4,000 – £14,000. The typical savings per year amount to £510. The rating after improvement is E51. The table also indicates that these works are supported through Green Deal finance.
- For the recommended measures for increases in hot water cylinder insulation, the indicative costs is between £15 – £30. The savings per year amount to £94. The rating after improvement is D56. As above, the recommended measures are supported through Green Deal finance.
- When it comes to heating controls (room thermostat and TRVs) the indicative costs are £350 – £450. The typical saving is £108 per year, and the rating after improvement is listed as D62. Again, these works are supported through Green Deal finance.
- If the property owner decides to replace the boiler with new, high efficiency, condensing boiler, the indicative costs are £2,200 – £3,000. The suggested saving is £314, and the rating after improvement is listed as C72.
In most cases, property owners are required to pay upfront for works required to improve energy efficiency, but it’s always worth investigating any funding options. For example, rental properties can receive a highly efficient new gas boiler under the Scottish Government’s ECO scheme when their tenants qualify under certain criteria.
The penultimate section of the EPC lists other measures that could improve the energy efficiency of the dwelling. Although there is less information about potential costs and savings, these alternatives can be a very good way to increase the energy rating of your property and should be something to consider. These are normally more expensive options and are only possible if you have more time and financial resources available to you.
About the document and its data
The EPC’s final page begins with basic information about the EPC, including the date of assessment and the assessor and their accrediting body.
This 2017 certificate concludes with a discussion of the environmental impact of the property. This measures carbon dioxide emissions from the property and shows the potential rating if all the recommended energy-saving measures are implemented.
We’ve given you a thorough overview of EPC requirements in Scotland and what private rental sector landlords need to know – but if you still have questions, then you can take a look at the Scottish Government’s EPC information page.
The Energy Saving Trust in Scotland is also a great information source – the Trust is part of a UK-wide non-profit organisation providing impartial information and advice and available funding options.