In an in-depth look at energy performance certificates, we relay industry experts’ main criticisms of the scheme, EPC limitations and how reliance on them has grown in the last 15 years. As the government steps back on EPC rules, is now the time for drastic reform in a bid to meet net zero commitments or is it time to take an axe to them in favour of property passports?
Energy Performance Certificates (EPCs) have come under fire for being too simplistic. Critics argue they give homeowners inaccurate ratings, suggest irrelevant efficiency upgrades and reward gas heating systems – which are bad for the environment – with higher scores.
Whatever the perceived faults or limitations, EPCs are a cheap way of getting initial recommendations to help lower your energy bill, a welcome source of household support in today’s climate of high inflation amid the cost-of-living crisis.
But now could be the time to improve or remove the system.
Following Prime Minister Rishi Sunak’s announcement that minimum EPC ratings would be shelved for private rental sector landlords, this gives the industry and government breathing space to reconsider the way EPCs work and the role they play.
Indeed, industry body the Royal Institution of Chartered Surveyors (RICS) swiftly made its stance clear.
“The government should also use this time to undertake a much-needed reform of the EPC methodology to ensure we accurately assess and incentivise energy performance improvements,” it wrote in a statement.
So, should the system be scrapped in favour of something new entirely? Or does the EPC offer a decent foundation and framework on which the government can build?
The ABC on the EPC
EPCs measure a home’s energy efficiency and rate a property from ‘A’ to ‘G’. ‘A’ is the most efficient and means the home is likely to have the cheapest energy bill while ‘G’ is the worst.
The certificate also offers recommendations to help households boost their rating and shows households how much carbon their property emits, although this isn’t reflected in the rating.
The EPC started life in 2007 as a tool to tell potential buyers or tenants how much they could expect to pay to heat a property. But now its use – and reliance on them – has grown, industry experts say the system needs reform if we are to improve the energy efficiency of our homes. This is a particularly important consideration as the majority of properties are rated ‘D’.
Stuart Fairlie, managing director of Elmhurst Energy, an accreditation body for EPC assessors, said: “Against a backdrop of rising fuel poverty, environmental pressures and energy security concerns, EPCs are coming in for a lot of scrutiny and criticism. This is understandable, as the EPC as it exists now is over 15 years old. It was designed then simply as a cost measure, showing how expensive or cheap a home is to run.
“But while there are rightfully calls to improve EPCs, scrapping them would be disastrous.”
Instead, Elmhurst is calling for changes to be made to the EPC system to measure how much energy a household uses and its carbon footprint as well as the cost to heat the home.
In 2019, 30% of UK emissions came from buildings, with 17% coming from homes according to the government’s Heat in Buildings Strategy. As such, improving the energy efficiency of our buildings has a huge part to play in plans to decarbonise our country.
Timothy Douglas, head of policy and campaigns for Propertymark, the industry body for estate and letting agents, said there’s “certainly a case to be made for reforms”.
But he added: “We need to be cautious when calling for the EPC system to be scrapped because it’s a well-known consumer brand. People recognise that legally you need one when a property is sold or rented.”
However, he adds that if this or the next government decide to reinstate minimum energy efficiency targets, the accuracy of the reports and their recommendations must be improved.
Digital property passbook
Propertymark proposes the introduction of a digital property passport or logbook which would include the EPC. “Instead of replacing the current system, this initiative would enhance it,” Douglas explained.
“A property passport would allow more data about a property to be captured digitally which would include changes and adaptations that have been made to the property and would include the EPC and its recommendations.”
Luke Loveridge, founder and chief executive of Propflo, which specialises in retrofitting solutions using AI, said: “Doing away with EPCs, along with the huge amount of historic data and network of trained assessors, just doesn’t make sense. EPCs measure most things that we need to make decisions about energy efficiency.
“But there are problems,” he adds.
“EPCs are being used to drive minimum energy efficiency standards and to give discounts on mortgage rates for higher rated properties, things they weren’t intended for. Recommendations made to boost your energy efficiency and the data fed into the EPC become out-of-date, quality can vary depending on who assesses the property and they don’t measure important things such as what you need to do to become a net zero home.”
EPC action plan
The Scottish government has launched a consultation to address some of these issues.
Among the proposals launched in August are plans to reform the way EPCs measure energy efficiency, their purpose, how long they are valid for and their format. Reform is needed, says the government, because the current measures and ratings aren’t fit to drive improvements or help the country meet net zero targets by 2045.
Elmhurst Energy wants to see England and Wales follow suit.
“Elmhurst Energy has long been calling for fundamental changes to the EPC and its underlying methodology,” Fairlie says.
“We need to revamp EPCs so they can properly assess where our rental stock sits in terms of energy efficiency. Scotland has already started the process of introducing such changes, and I think we will see similar progress in England and Wales within the next 12 months.”
“The good news for homeowners is that the government recognises change is needed. It has produced an EPC Action Plan and is seeking to change the law to allow improvements to be made.”
Putting the plan in place has been a long-drawn-out process. Published in September 2020, it is made up of 35 actions, 11 of which require changes to regulations. The aim of the action plan is to improve accuracy and reliability and produce a certificate that households find easy to use.
A government spokesperson said: “We agree that the metrics and information provided on Energy Performance Certificates can be improved. We are currently working to improve the reliability, accuracy and trust in EPCs through our EPC Action Plan and intend to consult on reforms to the Energy Performance of Buildings Regulations later this year.”