Just over half – 52% – of landlords with properties that need investment to align their energy efficiency ratings with incoming regulations have considered selling, a report form The Mortgage Works (TMW) shows.
The government has decreed that all rentals have an Energy Performance Certificate (EPC) rating of at least ‘C’ by the end of 2028.
Of the 621 landlords asked by Nationwide’s buy-to-let (BTL) arm, almost two-thirds have properties that will require improvements.
The more properties a landlord has, the more likely they are to be thinking about selling. TMW found that 63% of respondents with 20 or more properties have considered this, 58% of those with between six and 10 properties, and 35% of individual landlords.
And a sizeable number of landlords, 33%, don’t know what improvements they need to make to meet new regulations.
Of those who do know, 37% said they needed to fit traditional insulation and 25% cited boiler upgrades.
These figures, TMW says, naturally rise with the more properties a landlord has: “Some 59% of those with 20 or more properties say they’ll need to fit traditional insulation, while more than a third (37%) will need a boiler upgrade,” the report states.
TMW also found that landlords, on average, do not have a considerable amount of money set aside for unexpected costs.
The average amount an individual landlord has saved up comes to £6,599 while those with four to five properties have, on average, just shy of £15,000.
Landlords with 20 or more properties have an emergency fund of £35,202.
Early last month, Habito worked out that the cost of upgrading a property from an energy performance certificate rating of D to C is up to £6,155.
TMW head of lending Daniel Clinton says: “With currently less than four years before all new tenancies need to be in properties rated EPC C or above, there are still landlords who need to undertake remedial work on at least one of their properties. They are therefore understandably concerned about how they will both fund the work, find someone to do it and have it completed in time.
“The side effect of these concerns is that a significant number of landlords admit they are ready to give up and already considering selling properties.
“An unintended consequence of this sentiment could result in a backwards step in meeting the government’s target around climate change, for example, if these properties are taken up by the owner occupier market, where there are currently no minimum energy efficiency requirements.
“Working with the sector to understand how best to help landlords improve the energy efficiency of their properties and the timeframe within which they can do this may ultimately lead a better outcome for everybody.
And Propertymark policy and campaigns manager Timothy Douglas comments: “As domestic energy use accounts for 14 percent of overall UK emissions and 90% of homes in England currently use fossil fuels, improving the energy efficiency of the nation’s housing stock is one of the most significant challenges in reaching net zero emissions.
“If the alarming number of landlords who have considered selling up within the TMW report go on to do so, it will have a detrimental effect on not only the government’s ambitions to reach net zero, but also for the thousands of renters looking to be housed as stock levels deplete.
“In some parts of the market, this will put additional burdens on local authorities and increase demand for social rented housing as not everyone can afford to buy.
“To support the longevity of the private rented sector, the government must introduce realistic and achievable targets that take into account the diversity of the country’s housing stock. Furthermore, without incentives and sustained funding options that landlords can tap into, it is unlikely that the government’s proposals for energy efficiency will be met.”
