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Household Energy Efficiency Ratings ‘Inaccurate and Misleading’

Household Energy Efficiency Ratings ‘Inaccurate and Misleading’

Consumer group Which? is demanding an overhaul of the entire Energy Performance Certificate (EPC) system, asserting that green energy ratings for homes are “inaccurate” and “misleading”, according to a recent report.

EPCs rate properties from A to G based on their energy efficiency. However, many of these certificates are unreliable and confuse homeowners, landlords, and tenants, the report claims. This has led to some homeowners spending thousands of pounds on energy-efficient upgrades based on potentially flawed information.

Obtaining an EPC is a legal requirement before selling or renting out a property in the UK. Landlords face a penalty of up to £5,000 for not meeting the minimum rating of E. EPC assessments typically cost between £35 and £100.

The Which? report states: “There is now considerable evidence that too many EPCs do not provide an accurate assessment of the energy efficiency of a home. The metrics that are used are confusing for consumers, and there is a need to provide new information that would support consumers in the decisions they need to make.”

The report cites a study by Leeds Beckett University that found at least 27% of all EPCs completed between 2008 and 2016 have a discrepancy suggesting an error was made. Another study by University College London found that for properties where at least two EPCs exist, up to 62% of EPCs may be incorrect.

Moreover, a recent Government survey revealed that only 36% of the UK population understand what their EPC rating is. And a mere 29% of those aware of their EPC said they had seen the section with advice on how to improve their rating.

The Which? report adds: “The metrics and information in many EPCs may be misleading, and homeowners, tenants, landlords, and policymakers could be making decisions based on inaccurate information.”

These findings come after Michael Gove, the former Housing Secretary, acknowledged last year that the EPC system – introduced by the Labour government in 2007 to comply with a European Union directive – suffered from “a number of weaknesses”. He added that EPCs drove “perverse outcomes”, amid fears that property owners would be left unable to sell or rent their homes.

In September 2022, Rishi Sunak, the then-Prime Minister, scrapped plans to require rental properties to be more energy-efficient. The Government had intended to change the law so that rental properties would require a minimum energy efficiency rating of C by 2025 when leased under new tenancies. To meet the rules, property owners would have had to spend an average of £8,000 on insulation and other improvements, according to research by the estate agents Hamptons. Many landlords had already spent thousands of pounds to raise their rating in preparation for the 2025 deadline when the requirement was scrapped.

In December 2022, the Government launched a consultation on the Home Energy Model (HEM), a new methodology to rate the energy performance of homes. The model is set to replace the Standard Assessment Procedure, which underpins the EPC system, after the HEM is implemented in 2025.

However, landlords are concerned that the change may require them to reverse costly eco-friendly upgrades they had made to meet the previous requirements.

Daniel Särefjord, chief executive of Aira UK, a clean energy technology firm, said: “The Energy Performance Certificate regime is outdated, counterintuitive, and badly designed to meet consumer demand for accurate home energy efficiency ratings. EPCs should have a greater focus on the impact of the home on the climate, a metric that is lacking at this time.”

Chris Norris, of the National Residential Landlords Association, described EPCs as a “blunt tool”. “They [EPCs] are not fit for purpose. There’s a lot of inaccuracy because they are based on lots of assumptions about building, such as the extent of wall insulation,” he said.

“They’re a blunt tool and not very useful if you’re a landlord wanting to make an investment or a tenant wanting to know how energy-efficient a property is. If properties are given a very low rating, it’s hard to get a mortgage – lenders don’t want to touch it, and that applies to buy-to-let and residential.”

Norris added that there is a “lack of clarity” in the system because there are two EPC measures currently used – a property’s carbon impact and the cost to heat it. “In the landlord community, there is lots of unease – we don’t know which measure we should be favouring. We’re caught between a rock and a hard place.”

The Department for Levelling Up, Housing and Communities was approached for comment on the Which? report and the concerns raised by industry experts.

The EPC system has long been a contentious issue, with concerns about its accuracy, effectiveness, and usefulness for consumers and property owners alike. As the UK government considers reforms and a new methodology for rating home energy performance, it remains to be seen whether the system will be overhauled to address the criticisms and provide more reliable and transparent information.

Critics argue that the current system is flawed, confusing, and potentially misleading, resulting in homeowners and landlords making significant investments based on potentially inaccurate data. Proponents, however, maintain that EPCs serve an essential role in promoting energy efficiency and reducing carbon emissions from the housing sector.

Ultimately, any changes to the EPC system will need to strike a balance between providing accurate and actionable information for consumers while also aligning with broader sustainability goals and housing policies. As the debate continues, the need for a more transparent, reliable, and user-friendly system becomes increasingly apparent.

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