Donna Rourke
Head of ESG and Sustainability
There is new legislation proposed that, if introduced, would require homes to meet new green standards. Here are the potential changes to look out for and how they could impact you.
Climate change sits firmly on the daily news agenda and there’s a high profile global effort to cut greenhouse gas emissions to net zero, with more than 70 countries setting the target – a movement of increasing importance since WHO announced that almost the entire global population (99%) breathes air that exceeds air quality limits.
The green agenda has come under sharp focus on the home front too, particularly with the rising cost of living starting to bite.
The UK government has plans to improve energy efficiency and reach net zero carbon emissions by 2050. Homes are set to play a big part in the shake-up, with heating and powering buildings currently making up 40% of the UK’s total energy use, according to the government.
Against this backdrop, there is new legislation proposed in the pipeline that, if introduced, would require homes to meet new green standards.
Energy efficiency standards for homes
Currently, a home that is built, sold or rented in England, Wales, Scotland and Northern Ireland must have an Energy Performance Certificate (EPC). An EPC shows how energy efficient a property is. It’s rated between A and G, with A the most efficient and G the least efficient.
Proposals are being drawn up to change EPC requirements for homes in the future. To help provide some guidance, here’s an overview of how the plans shape up for both homeowners and landlords:
Homeowners in England and Wales
Currently: all homes marketed for sale must have a valid EPC.
Under proposal: all homes being sold will need to have an EPC rating of C or above from 2035.
Homeowners in Scotland
Currently: all homes marketed for sale must have a valid EPC.
Under proposal: all homes being sold will need to have an EPC rating of C or above from 2033. Homeowners could face a fine of up to £1,000 for failing to have the right EPC.
Homeowners and landlords in Northern Ireland
Currently: all homes that are built, or marketed for sale or rent, must have a valid EPC.
Under proposal: the Department of Finance is liaising with the Department of Levelling Up, Housing and Communities regarding potential changes in England and Wales. This may inform developments in Northern Ireland.
Landlords in England and Wales
Currently: all private rental properties must have an EPC rating of E or above.
Under proposal: all private rental properties will need to have an EPC rating of C or above for new tenancies from 31 December 2025. This will extend to all tenancies - existing and new - from 31 December 2028. The spending cap - the most you’re expected to invest to improve a property’s energy efficiency - could also increase to £10,000 by 2025. You could be fined £30,000 per property if you fail to have the right EPC from 2025.
Landlords in Scotland
Currently: all private rental properties must have an EPC rating of E or above - rising to D or above for new tenancies. All private rental homes will need to have an EPC rating of D or above from March 2025.
Under proposal: all private rental homes will need to have an EPC rating of C or above from 2028. You could have a bill of up to £1,000 if you don’t have the correct EPC.
What the EPC proposals could mean for you
With proposed changes in the pipeline, home owners and landlords with houses that have poor EPC ratings may want to get ahead of the game now and make energy efficient improvements. It’s worth noting, however, that the government has yet to outline what impact – if any – the EPC changes might have on those who own a Listed property.
According to Halifax, around 15 million homes in England and Wales need work to secure a minimum EPC rating of C. Perhaps unsurprisingly, older and detached homes tend to be the least energy efficient. The average EPC rating of the 4.2 million homes built before 1900 stands at E. Meanwhile, the typical EPC rating of a home built since 2012 is B or above, the lender said.
But there’s more than potential legislative changes for homeowners and landlords to consider. Green improvements are likely to help reduce household bills in the long run. Improving a home’s EPC rating by one ‘band’ could save an average £250 per year, Halifax found.
Environmentally-friendly upgrades could future-proof a property too, with recent research from Rightmove suggesting that a home’s energy efficiency could impact its value.
There are also signs that green improvements may boost a home’s overall appeal. Two-thirds (67%) of home movers think it’s important that their home is environmentally-friendly. This figure jumps to 75% among 18 to 34 year olds, according to our Housing Futures survey last year.
The survey revealed that double-glazed windows top the list of the most sustainable features people are looking for, followed by high levels of insulation and energy efficient heating materials.
Future Homes Standard
There are plans afoot for a new ‘green standard’ to make sure newly-built homes produce 75-80% less carbon emissions in future.
The proposed Future Homes Standard will set fresh environmental rules for all new homes built in England. It could see fossil fuel heating, such as gas boilers, banned in favour of new technology, such as air source heat pumps and solar panels, the government said.
Homeowners carrying out certain renovations to their existing home may also need to meet the requirements.
Details of the Future Homes Standard are currently being fleshed out and it’s expected to come into force by 2025. Other nations are working on their own initiatives to improve energy efficiency in new-build homes.
In the meantime, new regulations have recently kicked in (June 2022) that ensure new-build homes produce around 30% less carbon emissions compared with the old regulations.
What support is available?
There is growing momentum around how homeowners and landlords (as well as developers) can be supported and encouraged to have energy efficient homes.
The government says it has been working with mortgage lenders to help borrowers make eco-friendly upgrades to their home, as well as developing incentives which will encourage borrowers to buy a ‘green’ home. This includes some lenders now providing financial support to those carrying out improvements – including money set aside within a mortgage to be used for works (which must be done within a year), alongside offering ‘green mortgages’ for people buying and re-mortgaging.
Changes to stamp duty and council tax have also been suggested as ways to incentivise people to have energy efficient homes, but to date, nothing has been confirmed by the government.
And there’s various financial support incentives available to help people with the cost of improvements. These include the Energy Company Obligation (ECO) scheme and the Boiler Upgrade Scheme.
In one of the latest signs of the government’s ambitions, Chancellor Jeremy Hunt announced plans in the Autumn Statement to cut energy consumption from buildings and industry by 15% by 2030. He also pledged new funding for energy efficiency from 2025 and said the government would launch anew Energy Efficiency Task force.
From future proofing your home’s value and reducing your energy bills, to having a positive impact on our environment, there’s a host of reasons why homeowners and landlords can benefit from engaging with green legislation.
For tailored guidance on your home, our Building Consultancy team can advise on everything from gaining an understanding of what your EPC rating means for you, to making recommendations and project managing improvement works. When considering changes to your home, we’d always recommend speaking to an expert and ensuring that you only engage with reputable firms.
Find out more and contact Alexander Macfarlane from Building Consultancy here.