As landlords, we are watching developments in the ‘Energy Performance of Rental Property’ saga very closely. The short back story, as we are sure everyone is aware of, are the various announcements over the last several years, that central government wants to improve the minimum energy performance of rental properties from the current E EPC rating up to C. This is all a part of the net carbon zero strategy. The consequential likely cost of this for landlords, coupled with the ambiguity over the ‘how and when’ elements of the proposal, has caused many landlords to call it quits and to exit the market altogether. This has squeezed rental property supply considerably and – coupled with other market pressures – is putting significant upward pressure on rents.
Latest data suggests that up to 65,000 rental properties were sold by landlords in the first 3 months of 2023 – most of these with an EPC rating D or less – and many of these properties have been removed from the rental market altogether as a consequence.
All eyes are now understandably on the detail of the Government’s proposals for moving to EPC C, and the spotlight is now falling on how EPCs are going to be measured going forwards and what energy improvement technologies will be most beneficial to install in a property. There has also been anecdotal evidence for a while that the current EPC calculation methodology is not foolproof and is rather a ‘blunt tool’ at best.
Perhaps not unsurprisingly, a new study by social housing data and insights company, Switchee, challenges that Energy Performance Certificate scores themselves are not a reliable indicator of energy efficiency or heat retention in a property.
The study of 10,000 properties used data captured by multiple sensors across thousands of UK social housing homes. It measured the time taken for properties to lose 1°C of heat of internal air temperature when the heating was off. The data has revealed that the EPC rating of a home has no impact or correlation whatsoever with the energy performance of that home.
Specifically, EPC A, F and G homes are the best-performing with an average Heat Loss Rate (HLR) of just under 6 hours. EPC C and D are the worst-performing homes with an average HLR of 4 hours.
There was also a wide gap in Heat Loss Rate (HLR) measurements, with the worst-performing property losing 1°C of heat in less than an hour and the best-performing property losing 1°C of heat over 9 hours. The impact a high Heat Loss Rate (HLR) on the resident, is that they heat their home for, on average, 1 hour and 48 minutes longer than those with a low Heat Loss Rate (HLR).
It’s a common belief that a property type will impact its ability to retain or lose heat; for example, a mid-terrace will retain heat better than an end terrace. However, this study demonstrated that this factor also had very little impact. What does matter is the level of insulation and ventilation in the homes. Other impacting factors are the external weather in the area.
Instead of looking at the EPC rating in isolation, by looking at a property’s Heat Loss Rate (HLR) score, housing providers would be more empowered to allocate resources to the properties that they know are most in need, rather than those they think should be to meet laws set by Government. Furthermore, analysing Heat Loss Rate (HLR) before and after retrofit measures, can accurately assess the impact of those retrofit measures using real data from the homes.
There is obviously much more to come in this debate as we get closer to the Government’s target date for implementation of EPC later in this decade. We will report developments and new data as it emerges.
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