25th July 2023 

Last week, Bankers for Net Zero held a consultative roundtable on Energy Performance Certificates (EPCs) with experts and leading organisations focused on making them fit for purpose and delivering viable alternatives which contribute to the goal of decarbonising the built environment.   

EPCs are misleading and outdated 

Introduced in 2007, EPCs were implemented to assist individuals in making informed decisions when purchasing or renting a property. Every home available for sale or rent requires this certificate, which remains valid for a decade. Following a consultation in December 2020, the UK Government announced plans to increase the minimum EPC rating from E to C. This will apply to all newly let rentals from 2025, and to existing rental agreements from 2028. However, considering the UK’s old housing stock, many properties will be unable to reach that level. 

The primary rating displayed on residential EPCs is determined by the energy cost metric, while the rating for non-residential properties is based on the carbon metric. However, it is important to note that both ratings being labelled as measures of energy efficiency can be misleading, as neither of them directly represents a clear energy measure. EPC ratings were never designed to be a measurement tool. They tend to overestimate energy consumption by nearly twice the actual average, and this inaccuracy becomes more pronounced for energy-inefficient properties.  

Additionally, EPCs not only overestimate energy usage but also carbon emissions. The certificates are therefore misleading as they can be lower after installing a heat pump because the rating can overestimate the cost of heating due to outdated measures of heat pump efficiency.  Overall, EPCs are currently outdated and do not effectively encourage the adoption of energy-efficient practices and heating solutions necessary to achieve the Government’s Net Zero Strategy. 

That is why building on our retrofit work, Bankers for Net Zero just launched a workstream on this matter because the only way to enable private finance to flow into the retrofit agenda is to have the right tools to measure energy efficiency. 

Why is this also important for banks 

The topic of EPCs is important for banks due to several reasons. Firstly, banks need to assess risks when providing loans or mortgages to evaluate energy efficiency data to assess associated risks such as higher energy costs or potential future regulatory requirements. Energy efficiency plays a crucial role in determining the long-term value and operational costs of a property and overall energy performance, including its energy consumption, carbon emissions, and potential for energy-saving improvements.  

Secondly, banks often establish loan conditions or eligibility criteria related to energy efficiency. In some cases, banks may offer preferential interest rates or incentives for energy-efficient properties. EPCs serve as a tool for banks to verify the energy performance of a property and ensure it meets the predetermined criteria. They can also be used to set benchmarks or standards for energy efficiency that borrowers must meet to qualify for specific loan products. Moreover, compliance with energy efficiency regulations is essential for banks. Energy efficiency standards and regulations are increasingly prevalent in many jurisdictions. Banks need to ensure they comply with these regulations when financing properties.   

Additionally, considering energy efficiency allows banks to align their lending practices with sustainability objectives. By evaluating the energy performance of properties, banks can make more informed lending decisions, support energy-efficient investments, and contribute to sustainable development. 

What it means to get involved  

Bankers for Net Zero’s new EPC workstream will bring together policymakers, regulators, leading organisations, and financial institutions to share knowledge and work together towards the common goal of challenging EPC ratings. Building on existing best practice and research, this workstream will explore innovative technologies and solutions to improve energy performance in buildings and examine how EPC ratings can be made fit for purpose to deliver on the UK’s Net Zero targets.  Through our unique political activation, recommendations and interventions proposed throughout this programme will be advocated for through tangible political activities and broader policy engagement and parliamentary events. We will hold several roundtables and other engagement opportunities at Party Conferences and other events will follow. The final report with recommendations to Government is expected to be published early 2024 in Parliament. Ongoing political advocacy and engagement will continue into 2025.  

Contact us to get involved. 


Elena Pérez Celis 

Head of Policy & Public Affairs  

E: elena.perezcelis@bankersfornetzero.co.uk  

T: 07522124532