Yes, it is compulsory to have an Energy Performance Certificate (EPC) in order to sell a house in the United Kingdom.
Failure to produce an EPC when selling a house could result in a fine of up to £5000 from your local authority. More practically, you will find estate agents will refuse to market a property without an EPC. Even if you can find a buyer without an EPC, you will find that this causes problems during conveyancing.
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However, if the question is ‘do I need an EPC to sell my house for cash?’ then the good news is that many cash homebuyers will buy your home without an EPC, for speed and convenience, then apply for one on your behalf immediately after the sale.
To see what you could get from a cash house buyer, click below:
What is an EPC?
An EPC or Energy Performance Certificate is a legal document that rates the energy efficiency of your home. They were introduced in 2007 to give buyers and renters an independent and accurate assessment of how well insulated a home is, how efficiently it is heated, and what the estimated annual energy bill would be for a typical family of two adults and two children.
What does an EPC include?
An Energy Performance Certificate includes a number of details about the energy efficiency of your home, including:
- Energy efficiency rating – an overall score for the property based on the fuels used and the insulation present
- Potential efficiency rating – showing what is possible if improvements are made
- Energy performance breakdown – covering insulation in walls, roofs and windows and the efficiency of lighting, boilers and other appliances. These are rated very good to very poor (though this is based on theoretical / typical performance, not the actual condition or performance of your home or your boiler)
- Recommendations for improvement – including the typical cost of the improvements and the potential increase in EPC rating they could bring.
- Estimated energy use and costs – for a typical household in your property (this is an estimate and not based on historical energy bill data).
- Environmental impact – how much CO2 your property produces. This is rated separately A to G.
What is a good EPC rating?
Your EPC rating be given as one of seven bands, along with your individual score within that band as follows:
- EPC A rating = 92-100
- EPC B rating = 81-91
- EPC C rating = 69-80
- EPC D rating = 55-68
- EPC E rating = 39-54
- EPC F rating = 21-38
- EPC G rating = 1-20
According to Government figures, the average EPC rating in the UK is D (60), although new-build homes have an average rating of B (84).
A ‘good’ EPC rating is therefore anything above the average of D or 60 points, while anything below a D will be looked on as a negative by potential buyers.
Estimating costs and savings from an ECP
Why do I need an EPC to sell my house? Because it tells potential buyers everything that they need to know about the running costs of the property and the potential for improvement.
An EPC details how much it is likely to cost to heat and light the property as it stands – though bear in mind this is not the actual cost, but an estimate based on typical use by a typical household.
An EPC also tells potential buyers how much improvements would cost, and how much they could save on their energy bills by making these improvements. Some changes will be quick wins, such as adding to loft insulation or installing cavity wall insulation, while others will pay for themselves over a number of years, such as installing solar panels on the roof.
None of the improvements are compulsory, but the EPC report tells your buyers where improvements can be made and whether or not they are worth the cost.
How long is an EPC valid for?
An EPC is valid for ten years, though you can update your EPC at any time if you have improved the energy efficiency of your property. You can find out if there is a valid EPC on your property, and how long this has left to run, by searching on the Government website.
How to get an EPC for your property prior to sale
So now you know that an EPC is needed to sell a house, how do you go about getting one?
EPCs can only be obtained from qualified accessors, following a full inspection of your home. This inspection takes between 30 mins and 2 hours, depending on the size and complexity of your property.
Your accessor will need to look in every room and have access to the loft space and any other roof spaces. You will also need to provide paperwork to prove work such as cavity wall insulation has been carried out.
The easier you can make it for your assessor, and the more evidence you can provide, the better your chances of getting a fair and positive EPC score. You will normally get your EPC back within a couple of days.
According to the Homeowners Alliance, an EPC will cost between £60 and £120, and you can shop around between registered domestic energy assessors to get the best price.
If you disagree with your EPC rating, or you feel that the assessor has missed something that materially affects the rating, you can contact them and ask them to reconsider. If you still disagree after reassessment, you can complain to their accreditation scheme. You’ll find the details in your certificate.
Will the rating affect property value when selling?
With energy bills constantly on the increase, the question is not so much ‘do I need an EPC to sell my house?’ but more ‘do I need a good EPC rating to sell my house?’.
Homebuyers are much more energy conscious when it comes to choosing a property than they ever have been before, and rightly so. A typical property with an F (30) rating would cost over £2100 more to run per year than a typical C (80) rated property. This huge increase in running costs will clearly affect potential buyers’ interest in the home.
How does EPC rating affect house prices
According to Money Supermarket: ‘Improving your property’s energy efficiency not only enhances comfort and reduces bills but also significantly boosts its market value. For example, improving from a G to an A rating can increase property value by up to 14%.’
Their figures show that increasing your EPC rating from a D to a C increases the value by 2% and increasing from a D to an A increases the value by 6%.
Leading estate agent, Knight Frank, agrees. Their own survey showed that:
- 20% of buyers would pay more for an energy-efficient home
- 20% of sellers believed the value of their home would be negatively affected if they didn’t improve its green credentials
- Only 14% of buyers said the energy efficiency of a home would have no influence on their purchasing decision.
How to improve your EPC rating
There are many ways to improve the EPC rating of your home, and these will be detailed in the report you receive. These include:
- Increasing insulation in lofts and roof spaces
- Installing cavity wall insulation
- Upgrading to a modern condensing boiler
- Installing underfloor insulation
- Replacing windows with double glazed units
- Installing thermostatic valves on radiators
- Swapping light bulbs for low energy LEDs
You can also install solar panels for generating your own electricity, or a heat exchanger to heat your home and your hot water. However, these involve a significant investment which may not be appropriate if you are selling your home.
Is it worth spending money to increase my EPC rating? /h3>
One of the advantages of an EPC is that it clearly shows what improvements you could make to the energy efficiency of your home, how much these improvements would cost, and how many extra points they are likely to give you on your EPC rating.
This allows you to ‘do the maths’ on whether it is worthwhile making these improvements or not. Here’s an example of how this might work for a typical property without central heating:
- Property value £250,000
- Energy rating F (35)
- Cost of adding boiler and central heating £5,000
- Potential new EPC rating C (70)
- Increase in value +4% or £10,000
Each potential improvement can be calculated in this way and even small, inexpensive improvements can make a difference, especially if you are close to the top of an EPC rating band. You should always focus on the quick wins and avoid what would be long-term investments.
For example, additional roof insulation, which costs just a few hundred pounds could raise your EPC rating by as much as 4 points. If this lifts you from a D to a C, it could add 2% to the value of your home, which represents thousands of pounds making it a worthwhile investment.
Even if you don’t have the cash to spare to make energy improvements yourself, it is worth pricing them up. That way you can show potential buyers how easily they could raise the EPC rating and lower their energy bills.
The psychological effect of an EPC
Of course, the EPC rating of a property affects more than just the bottom-line price. It also affects the attitude of your potential buyers. With the UK going through what has been described as an energy crisis, energy efficiency has become a hot topic for homebuyers.
A good EPC rating could give your home the edge against a similar home with a lower rating, helping you to sell faster and at a better price. Similarly, a poor EPC rating, or even one that is lower than a competing home, could be all it takes to get you crossed off the list of potential properties.
What’s more, choosing which home to buy is often based on emotional factors. Feeling warm and cosy in your home, and not living in fear of enormous quarterly energy bills, are both strong motivators for people and will be a key part of the decision process for potential buyers.
Do I need an EPC to sell my house to a cash buyer?
Cash house buyers will consider any home in any condition, regardless of what work is required or how energy efficient the property is. How a cash home buyer values your home will depend on a wide range of factors, and the EPC rating will be just a small part of their process.
If you do not have an EPC, but you want to sell your home fast, you can still sell to a cash buyer. They will ask a number of questions regarding how your home is heated and insulated to help them make their own assessment. They will then order an EPC immediately after completion.
Not having an EPC will not significantly affect your valuation from a cash homebuyer, as their buying choices are not based on emotive ideas like having a cosy home or affordable energy bills.
To see what you could get by selling a home without an EPC to a cash buyer, click below:
Is there a minimum EPC rating to sell property?
Do I need an EPC to sell my house? Yes. Does this EPC need to reach a minimum level? Strictly speaking, no. While the Minimum Level of Energy Efficiency standard of 2018 means you cannot rent out a home with an EPC rating below E, there is no minimum rating required to sell a home.
That said, some mortgage lenders will not be prepared to lend on very low rated homes, or if they do, they will generally only be prepared to lend a lower amount. This means you may be limited on the number of buyers who are in a position to buy your home.
Expert Insight from Kelvin Elliott
Kelvin Elliott, founder and buying director of myhomebuyers.co.uk explains the importance of an EPC when selling your home.
“You should never underestimate the impact of EPC ratings on potential buyers. As well as worrying about the cost of running their heating, buyers want to feel like they will be warm and cosy in their new home, and this is a powerful image.
Cash buyers don’t think in these terms, so we don’t worry as much about EPC ratings. We will buy any home in any condition, with any EPC rating. And if you don’t have time to arrange for an EPC inspection, we can buy your home fast without one, and arrange it later.”
Do I need an EPC to sell my house?
Yes, under most circumstances. However, a cash house buyer may agree to buy a house without an EPC and arrange one later.
Does your EPC rating affect the value of your home?
Yes. Upgrading from a G rating to an A/B rating can add as much as 14% to the value of your home. Upgrading from C to A/B can add up to 4%.
Is there a minimum EPC rating to sell property?
No, however you may struggle to find a buyer if your EPC rating is lower than an E.
Can I sell to a cash buyer without an EPC?
Yes. Although it is compulsory to have an EPC to market your home, if you sell directly to a cash buyer, you may not need an EPC as the buyer will provide one on completion.
Is it worth upgrading the energy efficiency of my property?
In some cases, yes, improvements will pay for themselves in terms of increases in value. However, some improvements will not pay for themselves for many years, so you need to focus on the quick gains if you are looking to sell your home.
Conclusion
An Energy Performance Certificate is an important element in selling your home. It not only has practical implications, including directly affecting the value of your property, it can also significantly affect how potential buyers feel.
If your EPC rating is low and this is proving to be a problem, or if you do not have an EPC but want to sell fast, you can use a fast cash buyer. Cash homebuyers are not as concerned about EPC ratings as traditional buyers, and they can even arrange an EPC inspection after they have bought your home.