Three ways landlords can support net zero targets

Blogs 20 Jan 2022

From Energy Performance Certificate ratings to record-keeping requirements, find out more about the existing and upcoming legislation for landlords and tenants to support net zero.

Man fitting building insulation for energy efficiency

This content was reviewed on 6 February 2024. 

The net zero agenda is one that is growing in prominence and importance, with tenants and landlords alike looking to understand how they can best work together to reduce emissions, ‘green’ their premises, and do their bit to help the environment.

What regulations do landlords need to follow?

Landlords already follow laws and regulations to ensure the properties they let out comply with legal requirements in areas such as fire regulations and health and safety, ensuring that gas and electrical equipment is safely installed, and providing Energy Performance Certificates (EPCs) for their properties.

Amongst the legislation in place, some are to ensure properties are energy-efficient and are actively reducing their use and consumption of refrigerant gases such as hydrofluorocarbons in air conditioning units and cooling systems.

1. Energy Performance Certificate requirements

An Energy Performance Certificate (EPC) is a report that assesses the energy efficiency of a property, with a rating of ‘A’ being very efficient, and ‘G’ being very inefficient. These reports can tell you how expensive it will be to heat and light the property as well as informing you what the carbon dioxide emissions are likely to be. EPCs can also provide recommendations on how to reduce energy usage and how to save money.

How can a property be made more efficient?
  • Insulating pipes and tanks
  • Reducing water usage
  • Installing low-energy light bulbs
  • Switching to renewable energy technology
  • Loft installation
What are the legal requirements?

Since 2008, rental properties in England and Wales have been required to have an EPC. 

The Energy Efficiency (Private Rented Property)(England and Wales) Regulations 2015 (the Regulations) established a minimum level of energy efficiency for privately rented property in England and Wales. This meant that, from 1 April 2018, landlords of privately rented domestic and non-domestic property in England or Wales have had to ensure that their properties reach at least an Energy Performance Certificate (EPC) rating of E before granting a new tenancy to new or existing tenants. This also applied to a statutory periodic tenancy arising on or after 1 April 2018 after the expiry of a fixed term.

These requirements now apply even where there has been no change in tenancy arrangements, from 1 April 2020 for domestic properties, and from 1 April 2023 for non-domestic properties.

There are certain buildings which are exempt from the requirement to have an EPC, including those which are:

  • listed or officially protected and the minimum energy performance requirements would unacceptably alter it.
  • a temporary building only going to be used for 2 years or less.
  • used as a place of worship or for other religious activities.
  • an industrial site, workshop or non-residential agricultural building that doesn’t use much energy.
  • a detached building with a total floor space under 50 square metres.
  • due to be demolished by the seller or landlord and they have all the relevant planning and conservation consents.

There are also certain exemptions which may mean the property does not have to have a minimum rating of E, and these include:

  1. ‘High cost’ Exemption - The prohibition on letting property below an EPC rating of E does not apply if the cost of making even the cheapest recommended improvement would exceed £3,500 (inc. VAT). This applies only to domestic property.
  2. ‘7 Year Payback’ Exemption – This is where a recommended measure is not a “relevant energy efficiency improvement” because the cost of purchasing and installing it does not meet the 7-Year Payback test. This applies only to non-domestic property.
  3. ‘All Improvements Made’ Exemption – This is where all the “relevant energy efficiency improvements” for the property have been made (or there are none that can be made) and the property remains sub-standard. This applies to domestic and non-domestic property.
  4. ‘Wall Insulation’ Exemption - There is a special provision for circumstances in which cavity wall insulation, external wall insulation systems, and internal wall insulation systems should not be installed. This applies to domestic and non-domestic property.
  5. ‘Consent’ Exemption - Depending on circumstances, certain energy efficiency improvements may legally require third party consent before they can be installed in a property. If consent was required and sought, and was refused, or was granted subject to a condition that the landlord was not reasonably able to comply with then the exemption may apply. This applies to domestic and non-domestic property.
  6. ‘Devaluation’ Exemption - An exemption from meeting the minimum standard will apply where the landlord has obtained a report from an independent surveyor who is on the Royal Institution of Chartered Surveyors (RICS) register of valuers advising that the installation of specific energy efficiency measures would reduce the market value of the property, or the building it forms part of, by more than five per cent. This applies to domestic and non-domestic property.
  7. ‘New Landlord’ Exemption - The Regulations acknowledge that there are some, limited circumstances where a person may have become a landlord suddenly and as such it would be inappropriate or unreasonable for them to be required to comply with the Regulations immediately. If a person becomes a landlord in any of the circumstances set out below, a temporary exemption from the prohibition on letting a sub-standard property, or on continuing to let a sub-standard property, will apply. The exemption will last for 6 months from the date they become the landlord. This applies to domestic and non-domestic property.

    Where one these exemptions applies it must be registered by the landlord (or their agent) before it can be relied on; this registration is made on a self-certification basis and an exemption will apply from the point at which it is registered.

The Under the Regulation the responsibility for complying lies with the landlord and is enforced by the local authority. A landlord who breaches the regulations could face one of both of the following sanctions:

  • Financial penalty: depending on the length and seriousness of the breach, the landlord could be made  to pay  a fine of  either a fixed amount (defined by a set matrix) or a percentage of the rateable value of the property up to a max of £150,000, whichever is the greater, and/or;
  • Publication penalty: the details of the breach are entered on the public section of the PRS Exemption Register

Grants from the government, local authorities, or energy companies can help to pay for efficiency improvements.

Are EPC requirements changing to support net zero?

As of 2025, the government has stated that all rental properties will be required to have an EPC rating of ‘C’ and above, moving to ‘B’ and above by 2030 to help the UK’s target of being net zero by 2050.

To help properties contribute to net zero, landlords can take actions to improve the EPC ratings of their property, such as replacing a boiler with a newer and more energy-efficient model, installing solar panels, wall and loft insulation, and changing windows to be double-glazed.

2. TM44 inspections

Air conditioning units in commercial premises require a TM44 inspection every five years to comply with legislation. These inspections can provide landlords with information on how energy-efficient their air conditioning systems are. The reports can also offer advice on how money can be saved by being more energy-efficient when using the units.

Landlords and building owners with no up-to-date air conditioning inspection report can be fined £300 per offence. An inspection only needs to take place if they have an output exceeding 12W. If a system is made up of several individual units that are less than 12W but the total output exceeds 12W, then an inspection will also need to be carried out.

You do not have to follow the recommendations made in an inspection report, but you may save money if you do.

How can TM44 inspections support net zero?

These inspections can offer further insight on how to improve efficiency, reduce carbon emissions, and reduce electricity consumption. Inspections can also highlight opportunities for less efficient systems to be replaced with newer systems.

3. Fluorinated greenhouse gases

Fluorinated greenhouse gases (F-gases) include hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride, all of which are widely used as refrigerants in air conditioning units and commercial refrigeration systems.

What are the legal requirements?

Legislation surrounding F-gases (The Fluorinated Greenhouse Gases Regulations 2015, The Fluorinated Greenhouse Gases (Amendment) 2018, The Fluorinated Greenhouse Gases (Amendment) (EU Exit) Regulations 2021) was put in place to help reduce F-gas emissions as much as possible, as F-gases contribute to global warming as they can stay in the atmosphere for centuries.

Legally, any air conditioning equipment that contains more than five tonnes of CO2 should be leak-checked every once every year. If the system contains more than 50 tonnes of CO2 it should be checked every six months.

What responsibilities do landlords have?

Landlords should keep records that detail the date of the leak check alongside its results, the quantity and type of refrigerant used, and the quantity, type and equivalent CO2 in tonnes of each refrigerant that has been disposed of, recovered from, or added to the system. The identity and details of the company and any contractor which carried out the service also needs to be recorded.

Landlords also need to carry out regular inspections of any refrigerant in their properties so that as an ‘operator’ of such equipment, they can maintain their records, allowing the equipment to be safely used by the tenants of their property. These records should be updated with the quantity and type of refrigerant, the quantity added, details of any potential leaks, and the quantity of refrigerant removed and where this is removed to. These records must be available for inspection by relevant authorities for full compliance.

Regular testing of F-gases will mean that air conditioning units can become safer for the environment and help contribute to a greener atmosphere.

How else can landlords support the move towards net zero?

With the increase in sales of electric cars, landlords could install charging points for electric cars at their properties. In 2020, the UK announced a target to stop sales of petrol and diesel vehicles by 2030. By 2035, all new cars and vans must be fully zero-emission at the tailpipe. Grants are available to support the use of electric and hybrid vehicles.

Landlords could be proactive with the installation of smart meters in homes or commercial properties they rent out. Smart meters allow individuals and businesses to see what they are spending every day on energy, meaning they are more likely to change their energy usage habits as a result.

In addition, a new business rates relief announced in 2021 Budget can support investment in property improvements. From 2023, businesses making improvements to a property, including changes that support net zero targets, will not face higher business rates bills for 12 months. 

Next steps

Landlords may want to consider working with their tenants to take ownership of their own energy usage and have more decision-making power, such as by installing energy-efficient improvements. Whether it’s carrying out regular audits of the efficiency of their properties’ equipment or installing charging points for electric vehicles, this will help both landlords and their tenants to save money and help the planet.

Small business sustainability hub

The race to a net zero economy by 2050 has begun. We’re making sure small businesses aren’t left out of the big picture. Visit our sustainability hub today to explore free resources.

Find out more