Our response to the EPC Call for Evidence

Andrew Parkin, Director of Energy Certification and the other members of Stroma Certification’s senior team share our response to the EPC Call for Evidence – a consultation published by the Department for Business, Energy & Industrial Strategy (BEIS):

Question 1 - Have we captured all of the current uses of EPCs? Are there any existing or emerging uses we should be aware of?

  • EPC’s are used for ESOS auditing in the non-domestic sector
  • PAS 2035 compliance
  • Stock condition surveys and analysis
  • General mortgage affordability calculations

Question 2 - Do you agree that we have identified the key attributes for EPCs? Are there other important attributes we have not listed? Please indicate below how important you consider each attribute and provide details to explain your answer.

There is a direct relationship between quality and cost. Inversely, as cost is reduced quality is also likely to be reduced. Whilst we appreciate that is important for EPC’s and the associated data to be affordable, promoting them as low cost to produce, translates to the consumers as a low value product. Furthermore, low value products tend to be inherently less reliable and accurate.

One of the most important attributes of the EPC should be its perceived value
All existing building EPC’s require a site visit and the cost of getting to and from the site is often the biggest constituent part. The assessor should be empowered to do a thorough job and should be paid equitably to the time and effort spent on site. In doing so, the quality of information will improve, especially as advice can be given to a customer in person.

The monetary value of the EPC needs to be made clear. This value can be illustrated by making a clear link to tangible benefits such as rateable values and mortgage.

The insurance cost of the EPC should increase and cover a wider variety of financial losses

Question 3 - Which attributes are important for which uses and why?

In priority order:

Having an up to date EPC is absolutely key if the EPC is to be trusted by consumers and used as the starting platform for policy decisions. The current 10 year validity period does not allow for an up-to-date EPC to be present on the register. An up-to date EPC would support the uses identified above. We believe that an EPC should never be more than 2 years old to accurately represent the property.

Accuracy is of the upmost importance if the EPC is to be used to encourage action. This means that good quality initial training and ongoing competency assessment of assessors is fundamental. The correct identification of compartmental elements will directly impact the resultant recommendations that are generated on the recommendations report. Any incorrect generation could result in work that isn’t required being carried out at an unnecessary cost to the occupant.  This would result in complaints and ultimately the EPC being held in disrepute.

Reliability is highly important if the EPC is to be used as a wider measurement tool by stakeholders and for future trigger points/uses. Reliability also means repeatability.  A key point is that the EPC methodology is repeatable and needs to continue to be so in the future, to maintain a national benchmark.
Access to data, by proper and relevant parties is important so that appropriate, informed decisions can be made. Both the EPC data and the data used to create the EPC (evidence such as u-value calcs, air pressure test certificates, building control notifications, etc) should be portable and accessible (in the form of a data warehouse). This would improve accuracy, reliability and repeatability and ensure that default values are not relied upon where known values have been used previously. 

Improving energy performance, influencing decisions and keeping the EPC simple and low cost are driven by the points above.

Question 4 - What evidence do you have relating to the reliability of EPC assessments? Do you have any information on how reliability varies across different properties, and/or the likely sources of variation in assessments? It would be helpful to indicate how recent this is.

Access restrictions can play a major part in the variations between similar properties. For example, if a comparison was made between the results of two EPC’s for the same property:

The first - the assessor has been able to access the loft space, for a property, to accurately record the depths of insulation that may be present.

The second – the assessor has been unable to access the loft due to a restriction (such as the loft hatch being painted shut or heavy furniture blocking the entrance.

Clearly, the more accessible property will give more accurate results whereas the restricted property will use the defaults based on the date of build.

Some of these issues could be resolved with better client awareness and education. This would include Information about the assessment process, why access to certain areas is important and what assumptions will be made if an area cannot be surveyed. Of course, the client will only engage fully where they place a value on the EPC.  EPCs that represent a monetary value to the customer are much more likely to be accurate in this context.

Errors – this could be due to basic human input errors, or failure to follow the convention(s) that apply to each strand. With a move to the new SOR’s that include SMART auditing in the approach, schemes have a means to ‘target’ and identify EPC’s that are suspected to be incorrect. The initial signs of this are very positive, with erroneous EPC’s now being identified through a data capture process at the time of lodgement. Correctional training given to those assessors that are failing will be more successful, with more erroneous EPC’s being identified. All of this serves to improve the quality of assessors, quality of EPC’s and guarantees a more accurate and reliable stock of EPC’s on the register.

Other factors include; assessor competence, price competition, software accuracy, deliberate manipulation, and building complexity.

Question 5 - Which of the suggestions provided above do you think would be effective in improving the reliability of EPC ratings? Do you have any other suggestions for improving EPC reliability? Please provide reasoning and any evidence you have to support your response.

Allowing assessors to access previous EPC data and data from other sources via the ‘warehouse’ offers the opportunity to improve the reliability of the EPC.
Improving access to building control, planning and land registry data, however, could prove to be very useful. These sources can provide absolute reassurance of accuracy and can only serve to enhance the reliability of EPCs. The introduction of property “log books” would enhance this further and having all information relating to a property in one easily accessible place would both enhance and speed up the assessment process.

However, any data that is stored within the warehouse MUST be verifiable and subject to any necessary quality assurance via enforcement and a robust certification process.

Question 6 - What evidence do you have on the accuracy of the models used to produce EPCs (SAP, RdSAP, SBEM, DSM) in comparison to other methods such as the co-heating test?

EPC’s regardless of NCM are designed for repeatability and relative accuracy whilst producing a number of benchmarked metrics, such as:

  • Asset Rating (A-G)
  • Environmental rating (carbon emissions)
  • Heat demand and losses
  • Energy usage
  • Savings
  • Upgrade costs

Plus, many others. Alongside a publicly visible report.

Other methodologies available tend to be bespoke to certain applications or metrics. They tend to reflect how the property is currently being used and are therefore not benchmarkable across a wider sample. The availability of trained and competent individuals is also a limiting factor along with minimal necessary oversight (certification bodies) which would affect perceived quality. Additionally, on site testing of this nature is usually very expensive.

Question 7 - Are you developing any kind of tool for measuring the energy performance of buildings (controlling for the effects of occupant behaviour) using smart meter data or other data, which could be relevant for EPCs?

No – but we could assist where necessary.

Question 8 - What evidence do you have on how the accuracy of EPCs could be improved using the tools and data sources outlined above, or through any other means? Do you have any views as to how these approaches could best be incorporated into the current EPC framework?

Accuracy can only be improved via the following processes:

  1. General improvement of the methodology to incorporate new emerging technologies so that all properties can be accurately modelled. Additionally, all assumed values and defaults within all NCM should be reviewed and corrected where necessary (there are many instances of incorrect u-values with iSBEMs product library)
  2. Validations improvements in software would reduce poor quality data entry
  3. The reliable availability of value added data, such as up to data energy costs and assumed occupancy levels would ensure that the EPC is as an accurate reflection on the property as possible

Stroma Certification feels that we are a long way away from being able to create an EPC from smart datasets. The way an individual family or group uses a building will absolutely dictate the data that is generated and being able to benchmark would be extremely difficult.

It is also worth stating that, where appropriate, use of known performance data (such as known u-values vs as designed calculated u-values) would improve accuracy. It would have to be repeatable all year round, auditable and the data used would need to be stored against that property (property passport).

Question 9 - What evidence do you have on how frequently people are likely to make updates to their properties which would change the EPC score?

According to an article appearing in “The I” in March 2018, 15 per cent of homeowners have chosen to improve their homes rather than move, compared to 3 per cent back in 2013. Furthermore, research conducted by Zoopla shows that on average, Britons currently move home on average every 23 years. For comparison in the late 1980’s we moved home on average every 9 years. Without trying to speculate on the socio-economic reasons for this, simply relying on sale transactions to drive EPC production and therefore uptake of measures is not adequate to meet the goals and ambitions set out in future government policy. Whilst the common types of property upgrades are kitchen, bathroom and other decorative upgrades, the following types of improvement would have a material impact on the EPC rating:

  • Extensions
    • Loft conversions
    • Basement conversions
    • Extensions to the perimeter of the property
    • Conservatories
  • Insulation
    • Loft
    • Floor
    • Wall
    • Pipework
  • HVAC
    • Heating
    • Cooling/AC
    • Hot water
    • Ventilation
    • Controls (for all the above)
  • Openings
    • Windows
    • Doors
  • Renewables
    • Photovoltaic
    • Solar Thermal
    • Wind
    • Heat pumps

Question 10 - Which of the suggestions provided above do you think would be effective in ensuring that the information on EPCs is up to date? Do you have any other suggestions for ensuring EPCs remain up to date? Please provide reasoning and any evidence you have to support your response.

Reducing their validity period would play an important part in ensuring that EPC remains current. Reducing the period to two years would ensure that changes to the software calculation that are influenced by building regulations changes or bug fixes are reflected in updated EPC’s. This would mean that EPC’s can be compared as ‘like for like’ more accurately.

Introducing further trigger points for EPC’s is another excellent way of ensuring that EPC’s are up to date and reflective of the actual state of the property. Home improvements that would affect any of the parameters included in the EPC calculation such as HVAC, fabric and floor area should be represented in an updated EPC as these will materially change the result.
Utilising a common data environment (CDE) within a newly created data warehouse, new retrofit installations should be required to be uploaded along with full designed specifications, that can be subsequently utilised by the original EPC assessor to update the EPC without the extra burden of cost and time in revisiting site. This will serve the government’s clean growth strategy by ensuring that the EPC register is up to date specifically as properties change.

  • Cost
  • Time
  • Data portability
  • Future availability of data
  • Perceived value
  • EPC can be used for more things

Question 11 - Would you support introducing new EPC trigger points at any of the stages listed above (or any other stages)? What evidence do you have relating to the advantages and disadvantages of any of these trigger points?

Introducing further trigger points for EPC’s is an excellent way of ensuring that EPC’s are up to date and reflective of the actual property. Home improvements that would affect any of the parameters included in the EPC calculation such as HVAC, fabric and floor area should be represented in an updated EPC as these will materially change the result.

The data that is produced from the EPC is incredibly powerful for analysing our building stock - past, present and potential. However, that data is only meaningful if it accurately represents the current state of those buildings and is updated on a regular basis.

The current EPC validity period is 10 years. This means that an EPC could be 10 years old and still be used for any transaction or make strategic investment decisions about energy efficiency measures. This is unlikely to give consumers good and useful information about the current state of the property and could potentially result in confusion and mistrust in the document and data.

From a consumer trust perspective, more frequent trigger points and a reduced validity period would be a necessity.

We also know that on average sale transactions occur every 23 years. This could mean that in the future, even though the EPC will not be valid, the data that the government utilises for statistics and strategic policy purposes could be up to 20+ years old as no other trigger points have been prompted.
From a data analysis perspective, more frequent trigger points and a reduced validity period would be invaluable.

Question 12 - What evidence do you have on how useful the EPC recommendations are to consumers when they are considering making changes to a property? How effective are they at encouraging consumers to take action?

In isolation, recommendations present options to consumers that they may not otherwise realise could be applied to their properties or even exist. However, we believe that expanding the role of a DEA to offer occupants specific and bespoke advice about their home and explain the benefits of installing energy saving measures would provide a more holistic understanding. This is more likely to promote action. The same is true of Non-Domestic buildings, however as building modifications in this sector are considered business decisions rather than emotional investments, additional calculations such as life cycle cost analysis are usually required.

The costs that are currently generated on the EPC for fabric measures are based upon a cost range and a mid-point figure, irrespective of the size of the building. It would make sense to obtain well established typical figures from industry for the cost per metre squared of installed product and apply the calculated areas from the EPC data. This would give more accurate recommendation costs and therefore give occupants a more realistic appraisal of recommendation costs.

An approach akin to utilising AECOM’s published SPON’s Architects and Builder’s price book, utilising actual cost data for different types of buildings would give interested parties, (building owners, improvers etc.) more accurate, realistic cost information for basing ROI decisions upon.  This “real” data would make the savings more credible and hence the EPC more valuable.

Question 13 - Which of the suggestions provided above do you think would be effective in encouraging building owners to make appropriate energy performance improvements to their property? Do you have any other suggestions? Please provide reasoning and any evidence you have to support your response.

Evidence shows that where required improvements are mandated, (MEES) or incentives (FITs, RHI) there is a much greater uptake. A link to council tax banding could be an option for providing both the “stick and carrot” to the greater population, with properties that have installed measures that are reasonable and practically viable enjoying a % tax relief (or apply higher taxes to the worst performing properties).  This would allow home owners and occupants to have control over changing their council tax obligation by improving their properties, surely a clear, simple incentive?

Question 14 - What are your views on introducing operational performance ratings for non-domestic buildings, either on the EPC or separately?

A personalised version of the EPC could prove very useful to occupiers to demonstrate their influence on the energy consumption of the building in comparison to the national benchmark. This, combined with energy saving advice from a trained individual, could both influence behavioural patterns and the uptake of energy saving measures. We feel, however, that it is extremely important that this information is presented in a second document and doesn’t infiltrate the presentation of the current EPC. We feel that the ‘personalised EPC’ should be lodged against the property, which would in time provide invaluable in use data as the building changes hands when compared to the benchmarked EPC.

Additionally, the purpose of the EPC is to provide an asset rating, that is an indication of the energy performance of the building – it does not currently consider how the occupier manages their property. To incorporate operational ratings into the EPC would allow an occupier to have an influence over the energy rating of their property, which would go against everything for which the EPC currently stands. There is also the added complication that EPC’s are predominantly produced to cover a sale/rental transaction – so an EPC could be produced that reflects the current occupier’s energy usage, whereas the incoming occupier may use that building completely differently. As such, the EPC would then become inaccurate and misleading, not to mention extremely difficult to benchmark against other similar buildings.

A further issue relates to process energy. Many non-domestic properties contain large areas dedicated to process – examples include product manufacturers, brewers, supermarkets etc. All these buildings contain large scale equipment which contribute heavily to the energy consumption within the building. The issue is that for the EPC, we discount anything from the survey which is considered to be for ‘process’. As such, unless those specific areas or equipment is separately sub-metered, it becomes impossible to ascertain how much energy consumption can be attributed to the process tasks within the building. Any ‘operational performance’ not correctly accounting for process related tasks could significantly skew an EPC rating.

Therefore, the above issues need to be considered for Non-Domestic buildings. Stroma is very supportive of all Commercial buildings which are regularly visited by the public having a DEC lodged after the first year of occupancy.

Question 15 - What evidence do you have on how useful the EPC rating and cost information are to consumers when purchasing or renting a property? Are consumers using information on the EPC to negotiate property prices or rents?

Although it is early days, the MEES policy appears to be influencing buy to let investors to translate the EPC into tangible monetary values and use them as a bargaining tool.  MEES will only continue to drive this behaviour, in the medium to long term if enforcement is seen to be taking place.  This will reinforce the reality that a poorly performing property, by law, must be improved before it can serve its intended purpose as a rental property. Here, the mandatory requirement translates to action. Links to green mortgages would likely have a similar effect. The concept of introducing EPC images on mortgage statements is a very good one as it provides a subconscious link between the cost of purchase and the operating cost. This may stimulate positive engagement towards energy saving measures, helping the occupier visualise the money that they could save.

Stroma feels that annual fuel cost would be more useful for the consumer than the current 3 year costs and would like the Government to consider this, in line with comments in question 12 above.

Question 16 - Do you have any evidence on consumers’ understanding of the energy efficiency rating used in EPCs? Do you think a different rating such as carbon emissions or primary energy would have a better impact for consumers?

We do not believe that customers really understand the energy rating other than the A-G scale. They do not have an appreciation that the A-G rating is heavily linked to fuel costs. These fuel costs are ‘hard coded’ into the methodology via a set of tables and are only changed when the methodology changes. As a result, they are often a reflection of out of date fuel cost figures.
 
Whilst Stroma understands that the above allows for like for like comparisons, it would be interesting to explore the concept of using up to date localised fuel cost figures for bespoke uses of EPC’s (such as mortgage affordability assessments or measure savings and current bill costs).

Primary, energy would allow a consumer to understand the energy requirements of the property.

Question 17 -Which of the suggestions provided above do you think would enable prospective buyers and tenants to make more effective decisions based on the information on the EPC? Do you have any other suggestions? Please provide reasoning and any evidence you have to support your response.

The concept of introducing EPC images on mortgage offers is a very good one as it provides a subconscious link between the cost of purchase and the operating cost. This may stimulate positive engagement towards energy saving measures, helping the occupier visualise the money that they could save. A clear trajectory that displays the government’s aspirations for energy efficiency in buildings interlinked with any incoming policy’s (such as MEES etc) would provide very useful guidance for homebuyers and investors alike. It would allow time to financially plan for any improvements that may be required either as mandatory actions or by aspirational influences such as perceived property value. 

Question 18 - What evidence do you have on how easy it is to access EPC data or Open Data? If you are currently a user of the Open Data Communities website, what do you use the information for and how valuable is this website as a source of data?

N/A 

Question 19 - Which of the suggestions provided above do you think would improve the ability of building owners and other stakeholders to make effective use of EPC data? Do you have any other suggestions? Please provide reasoning and any evidence you have to support your response.

At the risk of repetition, all the suggestions and comments Stroma make within this consultation will heighten the awareness of energy efficiency for building owners and occupiers.  The step change here is making this stakeholder group proactively source current accurate energy information, the EPC, to make financial decisions about improving properties and buildings with energy efficiency measures.  For this to happen, a higher level of awareness and understanding of the EPC is a fundamental requirement together with a high level of trust in the data contained within the EPC.  For this to be the case, the factors we have talked about above are all relevant, reducing the validity period, adding trigger points, adding supplementary occupancy, (and other) data, adding more explanation will all make using the EPC “the normal” starting point for all EEM considerations.

Question 20 - How useful do you think a ‘data warehouse’, ‘building log book’ and/or ‘green building passport’ would be in increasing take up of energy efficiency improvements or supporting existing initiatives? What kinds of data might usefully be included in addition to EPC data and how could these proposals best be implemented? How might more comprehensive assessments be encouraged without making them a requirement for homeowners?

Building log books could provide an invaluable source of data against properties, which would serve to save time, money and effort across the whole lifecycle of the building. It has the potential to influence many different aspects of the building, from energy saving to health and safety, the buying and selling process and many more.

As an example, some of the data that is gathered during the production of an EPC, such as building dimensions and floor plans can be used by insulation installers to provide accurate quotations. They can prepopulate surveys such as legionella or fire risk assessments to save the assessor time on site and therefore money. The presence of electrical and gas safety certificates could provide auditable risk assessment information to building and contents insurers alongside lenders. The conveyancing process would be made more efficient, with documents such as Fenestration certificates and other documents that are not always immediately accessible being in one place. This follows the governments concept of BIM and their ambitions to utilise data to manage assets throughout their lifecycle effectively.

If property passports are made available for prospective buyers to view at the point of marketing it may create a competitive ‘information marketplace’, with vendors seeking to provide holistic, accurate and useful information about their properties.

Question 21 - What evidence do you have on compliance with the requirement for providing an EPC when purchasing/letting a property, or the requirement to display the EPC rating in property listings. Does this differ by tenure type or by any other subset of the building stock? What evidence do you have on the reasons for lack of compliance with the requirement for an EPC?

There is anecdotal evidence of a lack of compliance in the mandated use of EPC’s for various transaction types. We, however, are not in a position to provide statistics.

Question 22 - What evidence do you have on what enforcement work is currently being done to ensure that EPCs are being produced?

N/A

Question 23 - Which of the suggestions provided above do you think would be effective in improving compliance with the requirement for an EPC, bearing in mind the other changes to EPCs being considered. Do you have any other suggestions? Please provide reasoning and any evidence you have to support your response.

We believe that if the relevant enforcement authority (Local weight and measures or possibly building control) had access to a tool that highlighted new triggers (sale, rental, property upgrades etc) and allowed them to check for a corresponding EPC, compliance could be easily checked and remedial measures actioned.

Question 24 - What evidence do you have on costs of EPCs, how easy it is to procure an EPC or on consumer attitudes about EPC costs?

EPC’s are relatively easy to procure as there are a large number of trained assessors who are competing for work in the current market. The EPC market is currently saturated with a surplus of Energy Assessors and therefore prices are at a historically low level.

Historically, EPC’s have been viewed as a box ticking exercise, mandated by government that customers would seek to pay as little as possible for and would file without reference once their respective transaction was complete.

More recently, climate change and environmental issues have become a real focus of the media, and people, in particular the millennials, are beginning to take notice of the information that is being presented to them. There has been a trend set where it is considered ‘cool’ to be environmentally aware and participate in counter climate change behaviour.

It would therefore be a smart move to harness this attitude and direct the current movement towards EPC’s, making them an appreciated mechanism of measurement and an aspirational ‘badge of honour’ amongst the increasingly aware population. 

Additionally, the cost of energy and the increasing cost of fuel bills has become a major concern to the majority of householders and businesses in the UK, so much so that the Government has recently introduced capping of energy bills. If the EPC could be marketed effectively by Government to help the consumer understand and harness the EPC as a tool to help achieve monetary savings and reduce their impact on the climate, then the public would appreciate the value that the EPC possesses.

As previously noted, the MEES policy appears to be raising the profile of the EPC in the minds of stakeholders. Therefore, increasing the perceived value of the report and the role of an Energy Assessor.

Here, the mandatory requirement (or trigger point) transforms the EPC into a valuable asset.

Question 25 - Which of the suggestions provided above do you think would be effective making the process of procuring EPCs easier or more affordable, bearing in mind the other changes to EPCs being considered. Do you have any other suggestions? Please provide reasoning and any evidence you have to support your response.

It currently takes an average of 45 minutes to complete a standard EPC. If government would like more services to be provided without incurring significant additional cost, the time spent on site and survey take off must be kept to a minimum without compromising quality. This could be achieved by providing assessors useable data, is which easily accessible and reliable. The previously discussed data warehouse would be the perfect platform. Access to previous site data and other information held against the property would be useful. That said, it must be accepted that any change to the EPC process that is intended to:

  • Increase reliability
  • Increase quality
  • Provide a better customer experience
  • Be more detailed
  • Engage customers

Is going to potentially increase cost.

Question 26 - This Call for Evidence has outlined a number of options for making improvements to EPCs. Of the suggestions discussed in this document or which you have put forward, is there one or more you think is particularly important, or are there any other suggestions you have or comments you want to make about EPCs?

Stroma believe that the most fundamental and useful change to EPC legislation would be the reduction of the validity period and introducing new and more frequent trigger points. Making sure that EPC’s are representative of buildings in their current state is essential if consumers are to give any credence to the documents recommendations and advice, which is the ultimate goal and purpose of the EPC.

Respond to the EPC Call to Evidence

Members are encouraged to respond to the consultation via the BEIS website, by the closing date of Friday 19 October 2018.






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