A waste of energy: are EPCs fit for purpose?
A property's EPC rating is an important way to judge its energy efficiency, but some are saying that EPCs aren't fit for purpose anymore. We look at the pros and cons of EPCs and give our verdict in this post.
You don’t have to be Greta Thunberg to know that we’re in the middle of a climate crisis. And you don’t need to be Martin Lewis to know that there’s a cost of living crisis going on, too. Therefore, if you want to save the planet, and save your customers a wad of wonga on their heating bills at the same time, then instructing them to pay close attention to a property’s EPC is a no-brainer.
But there’s just one problem though: not everyone thinks EPCs are fit for purpose anymore. You could say they’ve got more critics than Matt Hancock. And even respected bodies like the Royal Institution for Chartered Surveyors (RICS) can’t wait to get them out of the property jungle (at least in their current form).
Consequently, with demand for eco-friendly homes slowly growing, let’s address the elephant in the room by asking why EPCs, a bit like Matt Hancock, need to rehabilitate their reputation. After all, what’s the point in investing in eco-friendly homes if there’s no reliable and trustworthy way of gauging their carbon footprint?
Where EPCS are still A-OK
Let’s start with the positives. EPCs still provide homeowners, landlords and tenants with a ton of terrific information that covers a property’s primary features from windows and insulation to lighting. They also suggest ways to reduce energy bills and even reveal approximately how much these changes will cost.
Our EPC system is also, believe it or not, a world-leading one. And it provides our policy-makers with a rather handy data record of more than 20 million buildings - information that can be used to shape legislation as the UK moves towards net zero.
Another advantage is that the public generally understands, at least on a basic level, what EPCs are all about: properties rated A are as green as a grasshoppers gullet, while those rated F might as well stand for ‘freezing in February’. The trouble, however, is that EPCs are now used for more than they were originally intended for. Consequently, they’re a bit of a blunt instrument when it comes to accurately assessing a home’s energy efficiency.
Where EPCs fall short
EPCs’ main problem is that they don’t actually measure a home’s energy efficiency. Surprised? You’re not the only one. Although they provide an ‘energy efficiency rating’ and an ‘environmental impact rating’, neither of these figures directly indicate energy efficiency in terms of overall energy use.
This was the crux of most complaints about EPCs compiled by the Environmental Audit Committee last year: EPSs are based on standardised data and only tell the story of how much a home might cost to run rather than its actual energy usage and the types of fuels used.
EPCs do not reflect, for example, the fact that electricity is more environmentally friendly than gas; the rating only considers that electricity is currently more expensive. A home heated by electricity, therefore, will be penalised in the ratings, even though it is strictly ‘greener’. As a result, EPCs only have so much value when it comes to meeting the UK’s net zero carbon emissions target.
Another problem is that while EPCs sensibly consider the overall size of a home, the calculations are often wrong by as much as 10%. This is because EPCs use what’s called the Reduced Data Standard Assessment Procedure, which uses averages or standardised values rather than actual, accurate measurements. There isn’t even a requirement to accurately reflect the structure of a building.
Although no system is perfect, EPC’s lack of accuracy is a big, big problem. After all, a 1% change in floor space can change an EPC score by 1 point. And this could be the difference between a landlord meeting the government’s new requirements - which state that all newly rented properties in the private sector must be rated C by 2025 - or just missing it. And landlords that miss could require hefty fines. Oh dear.
Potential EPC solutions
Fortunately, however, it’s possible to reform EPCs so they help the country move towards the Holy Grail of net zero. Top of the agenda is making sure that EPCs not only consider fuel cost as its main metric, but also take into account carbon emissions and the primary energy used to heat a home. Therefore, properties that use low carbon heating measures would finally receive a timely turbo boost to their score.
The way that EPC ratings are presented could also be improved. For example, why not copy food labelling and have separate (but adjacent) scores for running costs, carbon emissions, and overall energy usage in the same way that cupcakes come with different figures for fat, salt, and calories? This would immediately make EPCs more user-friendly. Buyers and tenants on a budget could zero in on costs while policymakers could be guided by the carbon metric when deciding who should receive funding. This was one of the ideas suggested by RICs.
The good news is that the government already recognises the need for change. Indeed, the September 2020 EPC Action Plan outlined the authorities’ desire to create “an EPC system that produces accurate, reliable, and trusted EPCs” by including key features of a building (including its fabric and improvements already made) to indicate a true measure of its “in use” performance.
Whilst the November 2021 Action Plan progress report showed there’s still much to be done, the government also recognises the need to educate the public and change perceptions so that EPCs are viewed as helpful guides rather than just regulatory necessities. New technologies that laser scan properties in 3D to accurately determine their size, would certainly help by increasing confidence in EPCs, too.
EPCs - the verdict
Despite an influential group of MPs calling for EPCs to be scrapped and replaced by ‘Building Renovation Passports’, doing so now would be like throwing the proverbial baby out with the bathwater. After all, EPCs contain a treasure trove of invaluable information and can still play an important role in helping homeowners to improve the energy-efficiency of their homes. Having said that, however, reform is clearly needed. So we’d like to see existing information leveraged, added to, improved in terms of accuracy, and then reshaped so it’s more accessible and easier to digest.
We’d also prefer all properties - rather than just those either offered for rent or sale over the last ten years - to possess an EPC. Did you know that 14 million UK properties don’t currently have one? This makes it harder for the government to benchmark energy efficiency standards and pinpoint households at risk of fuel poverty. EPCs should also be reissued (or checked) every three years or so to make sure that they’re up to date.
As the march towards net zero intensifies, and utility bills continue to rise like hot air through a badly insulated roof, energy efficiency will become increasingly important in properties’ marketability. Although recent research suggests that energy efficiency is not currently impacting house prices as much as one might expect, this is probably due to the chronic shortage of homes on the market. In other words, buyers can’t afford to be picky.
However, as things return to normal, it’s inconceivable that energy efficiency and eco-friendliness won’t play a major role in determining a home’s value. Greta and Martin, for example, wouldn’t be seen dead in a home rated E, F or G. Now it’s up to the government to make interpreting EPCs as easy as ABC.