Does my holiday home need an Energy Performance Certificate (EPC)?

If you’re a landlord with holiday let insurance, you’ll be expected to meet all your commercial landlord responsibilities for your policy to be valid. If not, you risk invalidating your cover, meaning insurers can reject any claim you make.

To help ensure your holiday rental runs smoothly, we look at your obligations regarding arranging an EPC.

• What is an EPC?
• Do I need an EPC for a holiday let in the UK?
• Which holiday let properties do not need an EPC?
• Why should I get an EPC for my holiday let?
• Will my insurance be invalid if I don’t have an EPC rating on my holiday let?
• What does holiday let insurance cover and do I really need it?

What is an EPC?

An Energy Performance Certificate (EPC) shows a building’s energy efficiency. Most properties will need an EPC if they are being rented, sold, or built. The results of an EPC must be made available before the property is sold or rented.

When a building is assessed for an EPC, it will be given a grade between A (the most energy-efficient) and G (the least efficient). You’ll also be given tips on how to improve your property’s energy efficiency.

EPCs last ten years and must be carried out by an accredited assessor. You can find an assessor for properties in England, Wales, and Northern Ireland at GOV.UK. For properties in Scotland, visit the Scottish EPC register at the Energy Saving Trust.

Do I need an EPC for a holiday let in the UK?

In England and Wales, you’ll need an EPC for your holiday let if it meets HMRC’s definition of a ‘furnished holiday let’ and it’s rented out for at least four months in a 12-month period (the ‘four-month rule’). The EPC must also be graded E or above.

Properties in Scotland and Northern Ireland must have a valid EPC, but they won’t need to meet any specific rating.

What counts as a furnished holiday let?

The definition (set by HMRC) is very specific. To qualify as a fully furnished holiday let, your property will need to meet all of these conditions (you can also find full guidance at GOV.UK, furnished holiday lettings):

Occupation condition

The property is rented as a short-term let for no more than 31 days in a row at any one time. Any longer rental periods (more than 31 days) should not add up to more than 155 days in the year.

Availability condition

Your holiday let must be available to rent by the public for at least 210 days in the year. You won’t be able to include the days you stay in the property.

Letting condition

Your property must be let for at least 105 days in the year. You can’t include any days when it is let to friends and family at reduced rates (in other words, it must be rented at full price).

Which holiday let properties do not need an EPC?

Some holiday lets won’t need an EPC:

• Holiday accommodation rented out for less than four months each year.
• Accommodation that is let under a ‘licence to occupy’.
• If your property is a listed building and energy efficiency measures may affect its historic value (you should ask for advice from your local council).

What is a licence to occupy?

This simply means the person renting the property has your permission to be there and to use its facilities on a temporary basis. Unlike a tenancy agreement, a licence to occupy also typically means you’re responsible for utility bills.

Why should I get an EPC for my holiday let?

Some holiday lets must have an EPC. If you don’t have one (but need to), you could be fined.

But EPCs aren’t just about fulfilling your obligations. If an assessment flags your property as energy inefficient, you can take steps to improve its EPC rating. Updating your property could help you save money on bills and maintenance costs in the long term.

While some changes can be expensive or impractical, others, such as LED lighting or sealing off draughts, are relatively easy to implement.

Will my insurance be invalid if I don’t have an EPC rating on my holiday let?

As the EPC certificate doesn’t directly relate to the safety of the property, it’s unlikely that your insurer would invalidate a claim if you don’t have one when you should. That being said, ensuring you comply with all your legal obligations, whether they affect your insurance or not, is always recommended.

Other landlord certificates, including electrical and gas safety, are legally required and would lead to a claim being declined if not obtained. This also includes any responsibilities set locally, for example, if you need a licence from your council.

Remember that when it comes to listed buildings, you’re expected to discuss energy efficiency updates with your local authority. If alterations are likely to interfere with the historical integrity of the property, you probably won’t be expected to make any changes to bring it up to the minimum E rating. However, you should discuss this with the relevant council department and keep hold of any correspondence.

If you’ve had any work done to your holiday let, it’s also worth keeping invoices and receipts as a record.

What does holiday let insurance cover and do I really need it?

Holiday let insurance typically includes buildings and contents cover alongside property owners liability, but you don’t need a policy by law. Bear in mind that if you have landlord or home insurance on the property and you operate it as a holiday let, this will likely invalidate the policy, and your insurer will reject claims. If you want to change your property usage, speak to your broker or insurer and they will be able to find an appropriate policy for you.

Holiday let insurance can give you peace of mind, knowing that you’ve got support if your property is damaged, and you need to repair or replace the building or its contents. Some policies also cover business interruption, allowing you to claim for projected income based on bookings if the property is uninhabitable.

If you want more information about how holiday let insurance can protect your investment, call 01603 216399 to speak to one of our experts.