In its bid to become carbon net zero by 2050, the UK government is tightening the rules around Energy Performance Certificates (EPCs).
EPCs grade a property’s energy efficiency and carbon emission from A to G with A being the most energy efficient. Currently, landlords must ensure all of their rental properties meet the Minimum Energy Efficiency Standards (MEES), which stands at grade E. Failing to do this means the property cannot be legally let.
But this is changing. From 2025, properties will need to meet an EPC rating of C to be legally let, which means landlords might have to carry out significant maintenance work to meet the new standard.
What does an EPC include?
EPCs are carried out by a Domestic Energy Assessor. They take around an hour to complete and usually cost up to £120. They are valid for 10 years. The assessor will routinely consider the following when grading a property:
- Windows
- Roofs, walls, and insulation
- Boilers and heating systems
- Any renewable forms of energy regeneration
- Lighting
- Fireplaces
- Building dimensions and age.
EPCs and farm tenancies
The changes in regulations have a number of impacts on farmers.
In regard to farm tenancies, if a landlord lets a property on a Farm Business Tenancy or Agricultural Holdings Act agreement, and the farmer lives in the principle farmhouse, the farmhouse is not defined as a domestic property and is therefore not required to meet the MEES.
If the property was let post-October 1, 2008, it will require an EPC, but it does not have to grade E or above to be legally let. This status is not forecast to change under the 2025 update in legislation.
However, if the tenant farmer were to sub-let a farm cottage to a third party on an Assured Shorthold Tenancy agreement, or they were to sublet the cottage to a farm worker on an assured agricultural occupancy, the regulations do apply in full.
Listed properties
The position for listed buildings, and those in conservation areas, is more complicated.
If a listed building or one in a conservation area was let after October 1, 2008, it will require an EPC.
However, to being granted one, only works that either don’t require listed building consent, or works that already have listed building consent, can be carried out on the property. If an EPC report recommends double glazing, new doors, or external wall insulation, these are likely to be considered unacceptable changes for such a property and won’t be made even to achieve a higher EPC rating.
Commercial lets
Letting non-domestic buildings for uses such as offices or retail use is a common way for farmers to make extra revenue. These are subject to slightly different rules to domestic properties.
Currently, non-domestic buildings that have a heating or cooling system must have an EPC and must comply with MEES – that is, to let them, the EPC grading must be E or above.
In line with domestic properties, this will change in future, and properties will need to have a rating of C or above to be legally let. Unlike domestic properties, however, the change for non-domestic is not due to come into force until April 1, 2027. A further change is expected on April 1, 2030.
Property types that could fall under the scope of the regulations include farm buildings that have been converted into offices, retail space, studios, show rooms and gyms.
Certainly buildings are exempt from EPCs altogether, however, and these include industrial sites, workshops and non-residential agricultural buildings with low energy demand.
Holiday lets
Another property type of relevance to farmers are holiday lets, as these are also a popular form of farm diversification.
Holiday lets require an EPC if you let one out as a furnished holiday let for short term rentals of less than 31 days per let, or for a combined total of more than four months.
However, there is an odd exception to this rule which means in all likelihood, a holiday let won’t need an EPC. The Government’s own guide to energy performance certificates states that an EPC is only required if the occupier of the holiday let – the guest – is responsible for paying the energy bills.
But as most holiday home owners will be responsible for paying them, an EPC isn’t required.
However, it is possible to argue that the occupier, or guest, indirectly pays the energy costs as part of their payment for the holiday.
This is a situation which has never been satisfactorily resolved with the Ministry of Housing saying in 2020 that it was not able to provide an interpretation of the law. Instead they advise contacting your local Trading Standards Office to clarify if they need an EPC.
Mixed picture
Ian Parker, director of Whitley Stimpson, said the regulations and the proposed changes, presented a mixed picture.
He said:
“As different regulations govern different types of properties, and the proposed changes impact in different ways, negotiating EPCs and how they apply to agricultural buildings is no mean feat. Anyone concerned about the changes should speak to Trading Standards, or else get in touch with us and we will be able to advise on the right option, as well as the best way to fund any remedial work needed to bring a property in line with the new regulations.”
To contact Whitley Stimpson, call (01295) 270200.
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