EPC Ratings, Where Are We Now In 2025?
In a shock announcement in 2023, former Prime Minister Rishi Sunak scrapped proposed EPC regulation changes for landlords. This move came as part of a broader shift in the UK’s approach to meeting its 2050 net-zero emissions target. While the changes allow landlords more time to improve their properties’ energy efficiency, meeting current EPC requirements remains crucial.
In this blog, we’ll explore what EPC ratings are, the current requirements for landlords, and how bridging loans can help you fund the necessary improvements.
What Are EPC Ratings?
An Energy Performance Certificate (EPC) measures a property’s energy efficiency and environmental impact. Properties are graded from A (most efficient) to G (least efficient), helping tenants understand energy costs and landlords assess their properties’ compliance with regulations.
New EPC Regulations 2025 Scrapped
The proposed 2025 regulations would have required landlords to achieve an EPC rating of C for new tenancies and by 2028 for existing ones. However, these deadlines were scrapped in 2023 in favour of a more “pragmatic approach” to climate goals. A new deadline for stricter standards has not yet been announced, though the issue may resurface as the UK progresses toward its 2050 net-zero target.
Minimum EPC Requirements for Renting
While stricter deadlines have been shelved, landlords must still comply with the Minimum Energy Efficiency Standards (MEES), introduced in 2018. Currently, rental properties must have an EPC rating of E or higher. Landlords renting out properties rated F or G must:
- Undertake necessary improvements to meet the E rating.
- Obtain an exemption certificate if improvements are not feasible or cost-effective.
Non-compliance can result in legal penalties, making it critical for landlords to ensure their properties meet these standards.
Benefits of Energy Efficiency Improvements
Improving your property’s energy efficiency:
- Enhances tenant appeal: Energy-efficient properties are cheaper to run.
- Future-proofs your investment: Likely compliance with future regulations.
- Increases property value: Energy-efficient upgrades boost marketability.
How Long Does an EPC Last?
An EPC is valid for ten years, regardless of property transactions during this time. Assessments include recommendations for improvements, often categorized by priority:
- High-priority improvements: Insulation upgrades, new boilers, or double glazing.
- Secondary enhancements: Switching to energy-efficient lighting or adding renewable energy sources like solar panels.
How a Bridging Loan Can Help Fund EPC Upgrades
Bridging loans are short-term, flexible financing options that provide immediate access to funds. Here’s how they can help:
1. Fast Access to Funds
Unlike traditional loans, which can take months to process, bridging loans are approved quickly—often within days. This allows landlords to start work promptly and avoid compliance delays.
2. Comprehensive Funding
Bridging loans can cover:
- Professional energy assessments.
- Material and labour costs.
- Unexpected expenses during the upgrade process.
3. Flexible Repayment Terms
Bridging loans are typically repaid within 12-24 months. Many lenders allow interest to be rolled up, meaning no monthly payments are required during the term. Repayment is typically through property refinancing or sale.
Real-Life Example
Imagine owning a Victorian property rated F on the EPC scale. To meet the minimum requirement of E, you need to improve insulation and replace the boiler at a cost of £15,000. With your funds tied up in other projects, a bridging loan offers immediate access to the necessary capital. Once the upgrades are complete, you refinance with a buy-to-let mortgage to repay the loan.
EPC Improvement Costs
While an EPC certificate itself costs less than £100, the cost of upgrades varies. Experts estimate achieving a C rating can cost around £4,700 for an average property, though older homes may require more extensive work. For landlords unable to meet these costs, the government has a cost cap of £3,500 (inclusive of VAT). If you’ve spent this amount but still fall below an E rating, you can apply for an exemption.
Key Considerations When Using a Bridging Loan
- Interest rates: Higher than traditional loans, so compare offers.
- Loan-to-value (LTV) ratio: Typically up to 75%.
- Exit strategy: Have a clear plan to repay the loan, either through refinancing or selling the property.
- Seek expert advice: Work with a bridging loan broker to tailor financing to your goals.
Conclusion
While the stricter 2025 EPC deadlines have been scrapped, meeting current minimum standards remains essential for landlords. Bridging loans provide a practical, speedy solution for funding energy efficiency improvements, helping landlords stay compliant and enhance their properties’ appeal.
Don’t wait for future regulations to catch you off guard—start upgrading your property today. With the right funding, you can transform your buy-to-let investment into an energy-efficient, tenant-friendly asset.
For more information contact us for a no obligation chat.
https://www.sunrisecommercial.co.uk/
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