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Green Deal and those EPC changes

Last month, Chris Huhne presented his second reading of the Energy Bill to Parliament and during his speech he said: “A quarter of the UK’s carbon emissions come from energy used in the home. Billions of pounds spent on domestic heating disappear up the chimney. Our outdated building stock is costing us the earth.”

The Green Deal, which is timetabled to come into effect from October 2012, places a huge emphasis on reviewing the energy efficiency of both the UK’s residential housing stock and commercial buildings and provides a mechanism for consumers to obtain finance (linked to the property and not the individual), which can subsequently be used to deliver long-term cost savings by installing energy-saving measures into their homes.

The Green Deal is formed around what is being called the ‘Golden Rule’, which means the instalment payment for energy saving measures, including finance, labour and product costs, should not exceed the projected cost savings on an average bill for the duration of the green finance arrangement (which could be for up to 25 years in some cases).

Another element of the Green Deal that has been featuring in the press is that, from April 2018, it will no longer be legal for landlords to rent out homes or business premises with an energy efficiency rating that is less than an ‘E’ on an Energy Performance Certificate (EPC).

According to Government figures, this means in today’s market that at least 682,000 properties would have to undergo some form of improvement in order to better their energy efficiency. Much work is therefore required over the coming weeks, months and years to enhance the green credentials of our buildings and homes.

As a member of the Property and Energy Professionals Association (PEPA), the collaborative group is working towards a number of objectives including positioning EPCs to support the new Green Deal, plus an objective to have all domestic and commercial properties requiring an EPC by 2015 – not just on properties that are being marketed for sale or rent.

This will greatly support the Government’s drive to raise awareness of not only the Green Deal, but of carbon reduction in general.

Back to the Green Deal, and a review conducted by Lord Marland and Andrew Stunnell MP into the role of EPCs and the Green Deal highlighted a number of observations, suggestions, updates or enhancements that should be taken on board before the initiative launches later next year.

Those published include:

The EPC needs to be clearer, more engaging, informative and relevant to the consumer; A more ‘tailored’ EPC for each property would be required for the Green Deal;Clearer ‘behavioural’ advice should be published; Measures that are relevant to the Green Deal could be highlighted; and The length of an EPCs validity is too long.

A host of other observations were included in the report and so we are certain that over the next 18 months it is likely that a number of further changes will come into force related to the EPC as its role is extended and incorporated into the Green Deal programme.   

Only recently, proposed changes to the Energy Performance of Buildings (EPB) regulations have been seen, which incorporate several changes as to how and when EPCs are commissioned, marketed and policed. The key proposed changes are as follows:

Commissioning EPCs

From July 1, 2011, the proposal suggests it will be a requirement to commission an EPC before marketing a residential and now non-residential building for either sale or rent. In addition, the current 28-day window in which an EPC is to be secured using what is known as ‘reasonable efforts’ will be reduced to 7 days, and if after that timeframe an EPC has not been obtained, the seller or landlord has a further 21 days to do so.
Producing documents when requested

Under the proposal, Trading Standards Officers (TSOs) will have the power to request that the seller or landlord of the property in question, or indeed any person or company acting on behalf of the relevant person, must produce evidence that an EPC has been commissioned if a valid EPC is not available to view on a marketed property. A number of changes will also come into play that will enable TSOs to enforce the new duties, though specific details on this are to be confirmed.
When an EPC is required

A technical amendment has been proposed to the regulation (Regulation 5(2)(b) of the EPB) that would remove the following wording: “before entering into a contract to sell or rent the building, or if sooner”. The intention here is to remove the incorrect belief that the provision of an EPC could be delayed shortly before the parties enter into a contract to either buy or rent the property. This is not the case.

EPCs in written particulars

One final suggestion included in the 2011 amendment proposal focuses on the inclusion of EPCs in written particulars. As from 1 October, 2011, EPCs would need to be attached to all written property details – not just residential sales – for buildings being sold or rented out, with the option to include the ‘asset rating’ no longer applicable.

These are of course proposals which are yet to be laid before Parliament and so are subject to change. However, a Department of Communities and Local Government spokesperson has been quoted as saying that once the necessary clearances have been obtained, the intention is to finalise the new regulations as soon as possible, with all but one proposal scheduled to come into force in early July. Let’s watch this space to see what is approved.

What is clear is that the role of the EPC is set to expand as energy measures are extended to more and more properties, and with the Green Deal less than two years away, the topic will continue to be high on the news agenda.

James Sherwood-Rogers is managing director of Quest: http://www.questuk.com

Comments

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    PeeBee, my nicer I am simply referring to houses that are warmed and less draughty. They may be more energy efficient too, but most tenants will probably not be too concerned about this unless is save money on utilities. However, the whole point of Green deal is that the savings on utilities is used to pay back the loan plus the interest so net outgoings will remain broadly the same.

    Deano, if the regulations are changed to make the new 7 day period apply to lettings will this really have any effect? In lettings you would most likely have given out "information in writing" or done viewings and Regulation 5, prohibiting these with having the EPC "available", will still apply.

    • 19 August 2011 12:46 PM
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    Re Manj and The 28 day period covers residential sales only.

    The old/current legislation is residential only. The new legislation covers all properties, residential and commercial for sales and lettings, subject to the current exceptions

    • 24 June 2011 09:44 AM
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    David d'Orton-Gibson: "The tenant does get a nicer house so supply and demand may have to prevail."

    Sorry?? Define "nicer" as per the above context, please...

    As I read it, this is either a lousy choice of wording, or a lousy understanding of the whole thought process when tenants (and buyers for that matter...) 'choose' a property!

    Let's be straight about this. The whole point of this, as far as PEPA are concerned - MORE EPCs required MORE OFTEN. The Gvt won't complain, either - all that luvverly tax income and higher charges for low-rating properties to boot!

    Jobs for the boys...

    • 09 June 2011 16:04 PM
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    Hi David,

    The 28 day period covers residential sales only.

    Thanks,

    Quest UK

    • 08 June 2011 15:26 PM
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    Nigel I think it will be negative. For tenants, I can see them feeling why should they pay more for utilities as the bills will be artificially high pay back the debt. The tenant does get a nicer house so supply and demand may have to prevail. I would guess home owners might want it encumbrance free too.

    James, is it not true to say that the 28 days rule only applies to sales and not lettings? Therefore the proposed change to 7 days will have no effect on lettings.

    • 06 June 2011 16:52 PM
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    The big question is will estate agents promote the Green Deal to sellers, buyers and landlords?

    All views most welcome.

    • 06 June 2011 10:10 AM
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