Understanding EPC Requirements for HMOs
Energy Performance Certificates (EPCs) have long been an important aspect of the energy efficiency assessments for rental properties, given the insight they provide into a building’s overall energy consumption and efficiency. These certificates play an important role in ensuring the sustainability and eco-friendliness of shared living spaces.
As an HMO (Houses in Multiple Occupation) landlord or investor, it is important to understand how and why compliance with HMO EPC requirements is crucial, and how this reinforces energy standards and environmental responsibility for properties in the UK.
What is an EPC?
An EPC, or Energy Performance Certificate, is a standardised document designed to provide information about the energy efficiency of a property. The certificate will assign a rating that grades the efficiency on a measurable scale, with A being the most efficient and G being the least efficient.
The certificate also offers recommendations on how you can improve your energy performance in the property, which in turn can help you reduce overall consumption. As an HMO landlord, this is a very useful piece of information that can help you reduce utility costs as well as reduce your environmental impact.
Many landlords and tenants find EPCs to be very important. According to the UK Renters Report, 48% of landlords think that EPC ratings are “extremely/very important”. This survey also suggested that 37% of tenants have used their EPC to reduce energy usage and save money.
How Do I Obtain an EPC?
To receive an EPC for your property, you must have an Energy Assessment Survey carried out in the property which costs £35-135 depending on the consultant. Your inspector will assess a number of factors that can impact efficiency including:
- Windows & Doors
- Boilers & Heating Systems
- Roofs, Walls & Insulation
- Property Age
- Building Size
- Lighting Fixtures & Bulbs
- Renewable Energy Devices (e.g. Solar Panels)
EPC Requirements for HMOs
Since 2008, all rental properties in England and Wales have required an EPC. However, there is confusion around the specific requirements in the case of HMOs.
Legal Requirements
The guidance from Communities and Local Government states that “An EPC is not required for an individual room when rented out, as it is not a building or a building unit designed or altered for separate use. The whole building will require an EPC if sold or rented out.”
This would mean that landlords who have an HMO with shared facilities (i.e. bathrooms, kitchens etc.) with individual tenancy agreements with their occupants do not need to provide an EPC unless the property is let as one dwelling (i.e. one contract between all tenants), or the property is converted into self-contained units.
Section 21
The Deregulation Act makes it unlawful to serve a Section 21 Notice in England for any tenancies that started after October 2015 without an Energy Performance Certificates (EPC), and the EPC and a gas safety certificate. However, as of 2024 it looks like the Labour government will be banning Section 21 evictions for good.
As much of the legislation around this is muddy at best, landlords may be inclined to just obtain an EPC as it only costs between £50 – £80 and lasts for 10 years. However, for those with older, large properties, as many HMOs are, this can complicate things when it comes to rating compliance.
Selling & Buying HMOs
Another consideration for EPC requirements is in the instance of selling or buying an HMO property. The guidance states that all domestic properties must have an EPC to be sold. Therefore, if you are planning on selling or buying an HMO, this is a factor to consider.
New EPC Requirements 2028
The current EPC regulations for rental properties, which have been around since 2018, set out that all properties let out to tenants must have an EPC rating of at least band E. These rules have to be compiled before the property is rented out, meaning that any that don’t comply can be landed with a fine up to £30,000.
One of the main proposed EPC chances for 2028 is the introduction of a stricter minimum energy efficiency rating for rentals. This change states that properties, both existing and new, must have a rating of at least band C from 2028, in line with the UK governments’ net-zero target.
Originally, the plan was to ensure all new tenancies were in bands A-C by 2025. However, after much lobbying and argument from landlords, the 2025 deadline has likely been scrapped and we are now looking at this being brought into effect in 2028.
How Does this Impact HMOs?
At the moment, the way that the changes could affect HMOs is not 100% clear and more changes could still be on the horizon. However, based on current legislation, if you are operating an HMO that has self-contained flats, or are renting out your HMO property under one agreement, it is likely that the EPC requirements will affect you.
Furthermore, if you are operating an HMO and have decidedly obtained an EPC for one reason or another, this means that your certificate must be C or higher from 2028.
