Energy Performance Certificates (EPCs) have been around for some time as part of the Home Information Pack (HIP) needed by vendors when they sell their homes.

The requirement has now been extended to rented properties and since October 1 there has been a legal requirement for landlords to produce an EPC when their properties are let.

The EPC has its roots in the Kyoto Protocol of 1997. This looked at ways of addressing climate change and greenhouse gas emissions and led to the issuing of a European Union directive, which in turn resulted in the EPC legislation.

In fact, by 2009 just about all properties, including public buildings such as offices, schools and hospitals, will have to have an EPC and, in some cases, these will have to be on public display.

An EPC is basically an assessment of a property’s energy efficiency, its carbon emissions and its subsequent energy bills, all set against a laid-down standard. This allows for direct comparisons to be made between properties.

A report also forms part of the EPC and recommendations are made on how to improve energy efficiency within the property. Estimates are also included of the reduction in energy bills likely to be made if these changes were to be put in place.

Properties are given energy efficiency and carbon emission ratings relating to their current state and also the ratings likely to be achieved if the recommendations in the report are implemented. The scale of the ratings goes from A to G, with A being the highest level of efficiency and G the lowest.

Most homes in the UK — apart from new ones, which usually incorporate various eco-friendly features — are rated D to E, so there is ample room for improvement.

So how does all this affect landlords? Although EPCs have only been around for a relatively short time, purchasers of houses are becoming much more aware of their significance.

In the same way, it is only a matter of time before tenants also catch on to the changes and start looking at the ratings and estimated bills of properties they are interested in renting.

In fact, in a recent survey by YouGov, 85% of tenants in the South East said they worried about household bills and 26% said they wished they’d found out about the level of household bills before taking on their particular property.

Clearly, with escalating energy prices, this is an issue that is likely to take on more importance, further borne out by the fact that in the survey, the level of household bills came second to location on tenants’ checklists of suitability when choosing a property to rent.

Recommendations in EPCs fall into two categories — those costing less than £500, such as hot water tank lagging, and thermostats on radiators, and those costing more than £500, for example, double glazing or cavity wall insulation.

While not compulsory, judging from the survey results, implementation could attract better quality tenants and even a higher rental value.

Furthermore, landlords can apply for grants to carry out some energy efficiency works and they may be able to claim tax relief on them, too.

Caroline Kavanagh, residential lettings operations director for Townends, says that landlords shouldn’t view the introduction of EPCs as a negative move.

“It is important that landlords don’t see this as just another chore when letting their property,” she said. “The EPC will only make recommendations on ways to make a property more efficient.

“The changes are not compulsory, but if a landlord does go ahead, it doesn’t necessarily mean it will cost them a large amount of money.

“Landlords should take into account any benefits to a tenant who may prefer one property over another because of its efficiency, especially with rising utility bills being a concern for many.

“As time goes on, prospective tenants will take more notice of EPCs and their content before jumping in to let.”

Camilla Day-Cameron of MacKenzie Smith lettings in Fleet agrees and believes that EPCs will be attractive to tenants, allowing them to make more informed choices.

“Really, it’s the same concept as buying an energy efficient washing machine, and it’s good for landlords, too, to be aware of the energy efficiency of their properties,” she said.

“Tenants will become more familiar with EPCs in time and I think it will give them a greater feeling of control.”

However, there appears to be some confusion among landlords as to who needs to have an EPC and when. Put simply, any landlord who is letting a self-contained property must have a valid EPC.

However, this only needs to be produced at the time of first letting or re-letting a property, although it should be available for the tenant to look at, free of charge, before their first viewing of the property and certainly before the signing of the tenancy agreement.

An EPC is not required if the current tenant was already in the property on October 1 or if they renew their tenancy. Nor is an EPC required on properties where rooms are rented out and tenants share facilities.

The good news is that once an EPC has been obtained, it is valid for ten years unless the property is sold during that time.

Paul Weller, managing director of Leaders, said: “We are hearing from many landlords across the areas we cover that they have been advised by other agents not to worry about getting an EPC at the letting stage as one can be obtained once they have found a tenant.

“This is completely incorrect information. Landlords face a £200 fine if they are marketing their property to let without an EPC in place, or if one has not been ordered 14 days or more beforehand.”

EPCs are issued by qualified domestic energy assessors (DEA) who physically examine the property. This process takes around 30 minutes for a flat and up to 90 minutes for a large house, and an EPC generally costs between £75 to £100.

Certificates can be issued within 48 hours, but landlords should bear in mind that getting an appointment with a DEA could take longer than expected because of the current backlog.

It could take some time for this to clear.

When buy-to-let specialist lender Paragon Mortgages carried out a survey, they found that in the week preceding October 1, 81% of landlords did not have an EPC for their properties and 54% said they would wait until their current tenants vacated the property.

But, it could be argued that procrastination could not only be the thief of time but also money. A delay in obtaining an EPC could mean that marketing has to be postponed with the property standing vacant — and losing rent — in the meantime.

However, because of the ten-year validity of an EPC, getting this paperwork sorted out well in advance will have little long-term effect.

Camilla Day-Cameron said: “We are trying to persuade our landlords to get their EPCs done now so they are immediately ready to market their properties if necessary.”