We recently considered that the requirement to provide an Energy Performance Certificate (EPC) is now over 10 years old and that some of the earliest certificates are expiring. The requirement of EPCs for listed buildings and properties of historic interest has been an ongoing source of confusion for landlords. Now its time to clear things up.
The history of EPCs for listed buildings
The regulations requiring an EPC for a building to be sold or rented, was The Energy Performance of Buildings Certificates and Inspections) (England & Wales) Regulations 2007. The specific section is 5(1). The exemptions are listed in section 4 and include places of worship and temporary buildings but no mention of those buildings that are listed or in conservation areas.
In these 2007 regulations, there is no requirement to carry out works only to provide the EPC. It is only when we look at The Energy Performance of Buildings (England and Wales) Regulations 2012 that we see, in Section 4, recommendations for cost effective improvements i.e. the foundations for Minimum Energy Efficiency Standards (MEES). Of course, at this point, we did not know the detail of MEES. The very next section (5) starts with ‘This Part does not apply to:
(a) buildings officially protected as part of a designated environment or because of their special architectural or historical merit, in so far as compliance with certain minimum energy performance requirements would unacceptably alter their character or appearance;’
On the surface, this would imply an exemption for listed buildings and those buildings in a conservation area because compliance would unacceptably alter the character or appearance. This was commonly held belief and indeed a quick search on the internet reveals that this remains the belief for many including EPC assessors and local authorities.
Important Update: From April 2020, all existing rental properties will require an EPC rating of ‘E’ or above. Read more here.
It is fair to say that the clause of the Regulations above does not provide absolute clarity, however, the words ‘in so far as’ provide the basis for the argument. This implies that the exemption for EPCs applies only “in so far as” it would unacceptably alter the character or appearance. In other words, it does not completely exempt EPCs for listed buildings, it is only an exemption from minimum energy performance requirements if the alterations would unacceptably affect the character or appearance. Outside of compliance with the Minimum Energy Efficiency Standards, the EPC would be required.
The MEES guidance was first published in late 2017. The guidance stated in a highlighted section that (Box 2 P22 of the original MEES guidance) ‘Where a listed privately rented domestic property, or a property within a conservation area, is required to have an EPC, that property will be within the scope of the Minimum Energy Efficiency Standard and will need to be compliant (complying means either being at a minimum of EPC band E, or having a valid exemption registered for it). If a property is not legally required to have an EPC, then that property will not be covered by the minimum standard regulations, and no exemption will be necessary.’
The first part of this extract very clearly indicates that there is no blanket exclusion regarding EPCs listed buildings and that at least some buildings which are either listed or in conservation areas do require EPCs. But the guidance goes on to say:
‘To comply with minimum energy performance requirements, many of the recommendations in an EPC report e.g. double glazing, new doors and windows, external wall insulation, and external boiler flues would likely result in unacceptable alterations in the majority of historic buildings. These can include buildings protected as part of a designated environment or because of their special architectural or historical merit (e.g. listed buildings or buildings within a conservation area). In these cases an EPC would not be required’.
This last extract suggests that in some case an EPC would not be required. You can begin to understand why there is still confusion on this issue. Sadly this second quote does not end by explaining that the exclusion only applies in respect of minimum energy standards, as can be seen, be reading the legislation quoted above.
EPCs for listed buildings: the lightbulb moment
The Minimum Energy Efficiency Standard currently requires properties to have an E rating or above. although this will change over time as the minimum rating is raised to a D and possibly beyond. With this in mind, our analysis and conclusions relate only to F & G rated properties falling described in the Regulations as ‘buildings officially protected as part of a designated environment or because of their special architectural or historical merit’. It has to be said that if it is possible to achieve a D rating, or above, at little additional cost now then this may result in future proofing the building.
It is important to understand that the term ‘legally required’, in this context, simply means when a property is marketed for sale or let and, of course, if a property legally requires an EPC then it must also comply with MEES. Complying with MEES for an F & G rated property means either making the improvements or registering a valid exemption.
Both the EPC & MEES regulations start to make a lot more sense in relation to listed buildings and conservation areas if you change the question from whether the building needs an EPC or not to what improvements do I need an EPC for.
We know from the 2007 Regulations that an EPC is legally required when the building is marketed for sale or let and the regulations do not identify any residential building that is exempt.
So, an EPC is only legally required for those improvements that would not unacceptably alter the character or appearance. Therefore MEES applies to those improvements. An EPC is not required for those improvements that would unacceptably alter the character or appearance and therefore MEES does not apply to those improvements. The important point is that as an EPC is not legally required for those works, there is no need to register those works on the exemption register. An EPC is required for the other improvements and therefore MEES does apply to them and, as a consequence, improvements in F & G rated buildings have to be completed or a valid exemption registered.
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A practical example to demonstrate could be a listed building with an F or G rating. The EPC recommendations to improve the energy efficiency of the building include double glazing and loft insulation. Applying the above logic would mean that because the double glazing would unacceptably alter the character and/or appearance i.e. does not comply with the conditions of the listed status, an EPC is not required for that improvement, MEES does not apply and no works or exemption is required. The loft insulation though is a different matter as this would be unlikely to unacceptably alter the character or appearance and therefore the EPC would be required for this improvement. MEES would apply and the work would need to be done or an exemption registered.
The explanation that an EPC would be required for some improvements and not others makes sense of the seemingly contradictory messages of whether an EPC is required or not for a listed building or a building in a conservation area. The implication, therefore, is that listed buildings and buildings in conservation areas, marketed for sale or let, do require an EPC assessment but some improvements recommended do not need the EPC.
For tenancy agreements started since The Deregulation Act 2015, the providing of the EPC, where it is legally required, is a prescribed legal requirement and a failure to provide it would render a Section 21 notice invalid. The consequence would be that an EPC would have to be commissioned and a copy of the certificate given to the tenant before a new section 21 could be served. The risk, in this scenario, is that if the rating is an F or G this could mean that a breach of the Minimum Energy Efficiency Standards has already occurred (at least for those works that can be done)
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