Let’s do away with EPC ratings

The Autumn Statement could propose offering discounts in stamp duty for homebuyers who take improvement to raise the Energy Performance Certificate (EPC) rating of their home during their first two years of ownership. Could this be the beginning of a new divergence between the Conservatives and Labour, where the Tories provide incentives and Labour pursue punitive measures? 

Previous government policy was to threaten the owners of homes with low EPC ratings. Landlords were to be banned for letting properties with a rating lower than ‘C’, and in the longer term it would become impossible to buy, sell or take out a mortgage on such a property. The policy threatened to blight millions of otherwise perfectly good properties. At present, fewer than half of homes in England have an EPC rating of ‘C’ or above.

More carrot and less stick over green policies seems a good thing. However, does an EPC rating actually mean anything? When you see a home given a colour-coded rating of between A and G, it is tempting to compare it with the ratings given to appliances such as washing machines and fridges.   But there is a very big difference. With an appliance it is easy to plug it in and measure how much energy it is using. EPC ratings, on the other hand, are not arrived at via real-world measurements of energy use. They are calculated by modelling. An energy assessor will measure the thickness of the walls, the loft insulation check to see if a property has double glazing and then feed it into a standardised model. Trouble is, like Professor Neil Ferguson’s Covid models, it is only as good as the assumptions which go into it – and in the case of EPC ratings this is often little more than guesswork.  

I have seen two flats in the same building – a converted 19th century institution – when one was given a ‘B’ rating and the other a ‘D’ rating. The latter – on the basis of previous government policy – would have been forbidden from being let out after 2025. What was the difference between the two properties? One report stated: ‘Wall insulation (assumed)’ and the other ‘no wall insulation (assumed)’. In other words one of the properties had been blighted purely on the guesswork of the energy assessor.

People have complained that they have ripped out gas boilers and installed heat pumps – which is surely what the government wants us to do – and seen their EPC rating fall, from B to D in one case. An EPC is neither a good measure of how much it costs to run a property nor of its carbon emissions. This is widely recognised among people in the property business. Even Lord Deben, former Chair of the Climate Change Committee, described them as ‘not fit for purpose’ (even though it was his committee which first proposed that homes below aa ‘C’ rating be barred from sale or rent). Yet the government ploughs on using them regardless, because it doesn’t have an alternative. That is not the basis of sensible policy – even if incentives to improve your EPC are less offensive than previous proposals to punish owners of homes with a low rating.