Reforms to the Energy Performance of Buildings regime

The government has recognised that because of the changing policy landscape there is a need to "clarify and consolidate existing regulations in order to make them easier for businesses and individuals to comply with." Its goal is to "deliver a more efficient and effective energy certificate system that works for all stakeholders, including landlords and tenants".

This has prompted a consultation on the wide-ranging statutory framework that governs how energy efficiency in the built environment is measured, the obligations imposed on those dealing with or managing property and enforcement.

Some of proposals represent a step change in the energy performance regime for buildings (e.g. when EPCs/DECs are required, treatment of heritage assets, EPC methodology). Now is an ideal opportunity to influence the legislative programme to ensure that any changes are fit for purpose.

The consultation (Reforms to the Energy Performance of Buildings regime) was launched by the Ministry of Housing, Communities and Local Government and supported by the Department for Energy Security and Net Zero. It can be viewed here and runs for 12 weeks from 4 December 2024 to 26 February 2025.

The proposals include:

• Clarifying and consolidating the statutory framework with an emphasis on improving elements of energy certificates in domestic and non-domestic buildings.
• EPC metrics.
• Refining requirements for EPCs and DECs.
• Improving data management and quality control.
• Overhauling air conditioning inspection reports (ACIR).

There is an extensive list of stakeholders (including builders and developers, property managers, insurance companies, local authorities and housing associations) from whom views are invited although it is open to anyone to respond.

Some key proposals are considered below.

EPC metrics

The government is of the view that the methodology used in the production of EPCs has "flaws" both in relation to domestic and non-domestic property and is influenced by measures that are beyond the control of building owners.

To address this the government is proposing to use multiple metrics (rather than one) to calculate the energy performance of domestic property.

In relation to non-domestic property the government proposes to retain the existing carbon metric. This is to ensure consistency in compliance with, for example, MEES regulations.

The government is inviting views on whether multiple metrics should be used to produce EPCs for non-domestic property and has suggested it may add additional metrics over time "where appropriate".

There is a proposal to modify how metrics are presented in EPCs and an acknowledgement EPCs could potentially be used to measure more than energy efficiency and "include other aspects of building performance". This will be subject to further user testing.

Additionally the government is calling for views on whether a cost based metric should be included for non-domestic EPCs and whether, for example, fabric performance, design of heating systems, smart readiness, carbon and SMETERs should be taken into account.

Introduction of EPC/DEC changes

The consultation suggests that changes to EPC metrics will arrive in the second half of 2026 and that users will need time to adjust. Changes to metrics for non-domestic property will arrive by updating the National Calculation Methodology.

The government has clearly stated that "Changes to the metrics will not invalidate existing EPCs, so existing EPCs could still be used to demonstrate compliance with existing regulatory requirements for the period of their validity." In practice this suggests transition to any new methodology will be introduced organically by allowing existing EPCs to expire.

Two key issues are also flagged:

• There will not be "direct" equivalence between the new and old metrics; each will measure different things.
• The practical result of this is the new methodology might result in a different energy efficiency rating.

The government recognises existing duty holders might have been proactive in ensuring compliance and so intends to explore "options for ‘deemed to satisfy’ arrangements, or ‘carry over’ rights."

Changes to when DECs/EPCS are required

Validity

Currently EPCs are valid for a period of 10 years. The government suggests a reduction in this period will, in the context of non-domestic property, allow landlords to "capture upgrades to their properties more easily, in turn potentially improving desirability in the market and aiding compliance with regulations such as MEES. However, landlords may also incur a very small increase in costs from more regular EPCs."

If the validity period is reduced the government has recommended allowing existing EPCs to remain valid until they expire at the end of the usual 10 year period (after which the changes will take effect) as a way of managing the transition in the least disruptive way.

Trigger for a new EPC

At the moment an EPC is only required on sale or let; not, for example, when the same tenant renews or extends its lease.

The government proposes that landlords will need to obtain new EPCs when their current EPCs expire during the lifetime of a lease. This would ensure that "landlords and tenants are equipped with accurate and up-to-date information."

Additionally it is proposed that a building should not be marketed for sale or let without an EPC (removing the current flexibility to obtain an EPC within 28 days following commencement of marketing).

The government is also tightening up the EPC regulations as they currently apply to HMOs and short term rental properties. In the case of an HMO a landlord will be required to obtain an EPC for the whole house even if a single room is rented out. In the case of short-term rental properties a valid EPC will be required at the point of being let.

Heritage assets

Historically heritage assets such as listed buildings and protected monuments have not sat easily within the current statutory framework because of their unique nature. This has resulted in confusion about the extent to which the statutory regime applies to these buildings and, if it does, the steps that must be taken to ensure compliance. The government says that for landlords to know if the regulations apply, they must "require some level of energy assessment of their property to know what recommendations would be included on an EPC."

In the future, the government says it will require all heritage buildings to have an EPC. There will, of course, be implications for landlords of heritage assets in terms of MEES compliance but the government says "if consent by the relevant authorities cannot be obtained, or if any of the recommendations on the EPC that need to be made, devalue the property by more than 5%, we would plan for this to be further balanced by ensuring EPC recommendations are tailored appropriately to consider the nature of the buildings."

To help deal with the unique nature of heritage assets the government has said "we will consider making changes to the EPC calculation methodologies to enable tailoring of recommendations for traditional buildings, those in conservation areas and other heritage buildings" while at the same time making it clear "existing exemptions under Minimum Energy Efficiency Standards would remain."

DECs

The government is seeking views on alternatives to DECs and its proposals to reduce the validity period of DECs and accompanying recommendation reports from 10 years to 7 years for buildings between 250-1,000m² and from 7 years to 5 years for buildings over 1,000m².

Removal of public opt out

At the moment it is possible to opt out of making EPC data publicly available. The government proposes to remove this. It says "The opt-out hinders prospective buyers and tenants without access to the Report Reference Number seeking information about the energy performance of a property". It thinks EPC data should be available to all protective buyers, tenant and enforcement officers.

Compliance and enforcement

There is a perception that because of conflicting priorities compliance with energy efficiency legislation is "low" and enforcement is "minimal or non-existent". The government proposes improving this by introducing a "differentiated and targeted" approach that will include reviewing and improving "current guidance to help relevant persons, persons acting on their behalf and enforcement authorities to fulfil their responsibilities."

The government proposes increasing the minimum and maximum levels of penalties that can be imposed (but not the percentage in the rateable value).

It is also considering increasing this six-month period during which compliance action can be taken.

Air conditioning

Compliance with ACIR requirements is also low and is an area where the government says there must be significant improvement. To drive this the government says "We are proposing to increase the penalty charges to encourage compliance with the regime. Increasing these charges may also encourage enforcement officers to focus more resources on enforcing air conditioning inspections."

The consultation document also includes suggestions around redesign of the ACIR which may encourage improved engagement by those with responsibility for air conditioning systems.