Proposed Reforms to the Energy Performance of Buildings Regime: a welcome change or just more costs?

The consultation on the proposed reform of the Energy Performance of Buildings regime was launched on 4 December 2024 and outlines significant proposed reforms to the Energy Performance of Buildings (EPB) framework in England and Wales.

This consultation aligns with the UK's ambitious net zero by 2050 target, with a strong emphasis on decreasing the carbon footprint of buildings—a sector responsible for around 20% of the country's greenhouse gas emissions. These reforms aim to enhance the applicability and quality of energy certificates, update metrics for Energy Performance Certificates (EPCs) and Display Energy Certificates (DECs), and improve data management and quality control.

Property stakeholders are encouraged to give their views on the reform, with the period for responding to the consultation ending on 26 February 2025.

The Context

Subject to a few exemptions, EPCs are a requirement for all buildings  when they are constructed, sold or leased. They record how energy efficient a building is by providing a rating from A+ to G (A being the highest rating for a domestic building). The EPC also contains recommendations for cost-effective improvements that could be made to the property to improve its energy efficiency. EPCs are used as the basis for energy efficiency targets for the regulatory requirements of the Minimum Energy Efficiency Standards (MEES). MEES provides a requirement for landlords of domestic or non-domestic property to reach a minimum energy efficiency standard before they are let, or whilst an existing lease continues. Properties must have a valid EPC rating of E or better; if a property does not reach this standard, landlords must not grant new leases or continue existing leases unless the landlord makes sufficient energy efficiency improvements to the property.

DECs are similar but record the energy performance of a building based on actual energy consumption as recorded over the last 12 month period. The rating provided demonstrates the actual annual carbon dioxide emissions from the building. Similar to EPCs, the ratings are from A to G, with A being the lowest carbon dioxide emissions.

Key Proposals

Updating EPC Metrics

As it stands, for domestic buildings, the Energy Efficiency Rating is the primary metric, while for non-domestic buildings, the Environmental Impact Rating is used.

For domestic buildings, multiple metrics are now proposed, including 'fabric performance', 'heating system', 'smart readiness', and 'energy cost'. This multi-metric approach aims to provide a more comprehensive view of a building's energy performance.  The current single metric does not provide a complete representation of a building's energy performance and the results can be misleading. Concerns have been raised about the current metrics including by the Climate Change Committee (CCC).

For non-domestic buildings, the Government proposes maintaining the carbon metric as the single headline metric for non-domestic EPCs, aligning with net zero objectives (as this single metric is already carbon-focused).

Any changes to the EPC metrics would be introduced in the second half of 2026. Changes to the metrics will not invalidate existing EPCs, which could still be used to demonstrate compliance with existing regulatory requirements for the period of their validity.

Validity of EPCs and DECs

The consultation proposes reducing the validity periods for EPCs and DECs to ensure more up-to-date energy performance information. This change is expected to capture building upgrades more frequently, providing prospective buyers and tenants with more accurate data, better reflecting the current state of the building.

The Government’s preference is to allow all existing EPCs to remain valid until the end of their existing validity period and apply any new validity period to new EPCs. The consultation seeks input on what any new validity period should be, rather than making a recommendation as to a particular period.

The Government is considering reducing the validity period of DECs and DEC recommendation reports from 10 years to seven years for buildings between 250-1,000m², and from seven years to five years for buildings over 1,000m².

When are EPCs or DECs Required

For private rented buildings, it is proposed that the expiry of an EPC becomes a trigger for a new one being required rather than, as currently, when the property is marketed or sold. This will also ensure most lease renewals would be potentially subject to MEES. It is proposed that a building should not be marketed for sale or let without an EPC, ensuring that buyers and renters have access to energy performance information at the point of decision-making. The current position is to allow a maximum of 28 days following the marketing for the EPC to be produced.

It is also proposed that all heritage buildings be required to have an EPC. Previously, this was not a requirement due to the special architectural or historical merit of these buildings. This change would be balanced by tailoring EPC recommendations appropriately to take into account the historic nature and architectural features of the buildings, and existing exemptions under MEES would remain.

The consultation does not refer back to the previous 2021 consultation on sub-standard ratings for energy efficiency. However, another consultation on improving the energy performance of privately rented homes launched on 7 February 2025. The Government has, again, mentioned their intention that all residential property in England has to achieve a minimum EPC rating of band C by the end of 2030 – despite resistance from the residential sector.

EPC and DEC Data Management

It is proposed that the ability to opt out from registering EPCs on the central EPC register should be removed, so that EPCs are available to all prospective buyers or tenants through the public register.

The consultation proposes removing the general prohibition on sharing data gathered under the EPB Regulations and replacing it with a Secretary of State discretion about when, how, and with whom to share the data.

Penalties and Enforcement

Landowners should be aware of the potential changes to penalties for breaches of the requirements of the EPC regulations. The consultation does not propose to change the percentage of rateable value (12.5%) as the basis for penalty changes for non-domestic EPCs, but proposes that the maximum penalty would increase from £5,000 to £10,000.

Air Conditioning Inspection Reports (ACIRs)

ACIRs are mandatory inspections carried out by accredited air conditioning energy assessors at regular intervals, for all air conditioning systems with an effective rated output of more than 12kW. The consultation proposes increasing the penalty charge for non-compliance with the requirement to have an ACIR to £800.

The proposed reforms to the EPB framework aim to enhance the quality, applicability, and data usage of energy certificates, with significant impacts on both domestic and non-domestic buildings. These reforms are expected to support the Government's net zero objectives, improve the energy performance of buildings, and provide stakeholders with accurate and reliable information to make informed decisions.  However, these proposed changes come with increased costs to landowners to comply with the changes and make improvements. It is likely that these costs will be offset against tenants, especially in the residential sector, which may push up rents even higher.

You can read the consultation paper in full here.