Two-thirds of landlords do not meet proposed EPC 'C' targets: Foundation Mortgage Finance Gazette

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Just over two-thirds of landlords (67%) currently own at least one property that does not meet the new requirements for the government’s proposed energy performance certificate (EPC) ‘C’ targets, Foundation Home Loans Q3 research report reveals.

This comes in response to a recent government announcement that it will consult on proposals for private and social rented homes to achieve EPC C or equivalent by 2030.

The research found that awareness of these EPC standards is high, with 92% of landlords having at least some knowledge of the requirements but only 67% report a thorough understanding of the details.

Portfolio landlords with four or more buy-to-let mortgages demonstrate slightly lower comprehension of the potential regulations, with 62% stating they fully understand the requirements compared to 69% of unencumbered and consumer borrowers.

Of those meeting the EPC standards, 42% of landlords intend to make the necessary improvements to bring their impacted properties up to standard.

Meanwhile, 24% plan to carry out works at the minimum cost required to comply, and continue to let the property out, 14% aim to carry out the works that maximise the long-term value of the property, and continue to let it out, while 3% will carry out works to bring it up to standard then sell it.

However, 34% plan to sell without undertaking any work or not re-let the property, 17% responded ‘other’ and 3% don’t plan to carry out any works but continue letting the property out.

For those who plan to carry out the necessary work, 17% expect to fund the improvements through savings, 41% through rent increases and 28% through government grants/funding.

A further 12% saying they would release equity from their portfolio and 5% seeking a further advance from a mortgage lender or 5% from a loan.

Of the planned upgrades 37% include solid wall or floor insulation, 26% include loft insulation, 25% include boiler or heating system upgrades and 22% include solar PV panels.

Notably, 13% of landlords remain uncertain about the specific improvements needed, while 37% are unsure of the total potential cost per property.

The latest findings are based on 720 online interviews conducted between September and October this year.

Foundation Home Loans director of sales Grant Hendry says: “With potential new legislation aiming to raise energy efficiency standards and tackle fuel poverty for millions, landlords face important decisions around future-proofing their investments from an EPC perspective.”

“Thankfully, this research helps demonstrate growing awareness among landlords around this topic and highlights both the financial and planning considerations involved in meeting these requirements.”

“It also underlines the tremendous potential for lenders and intermediaries to support sustainable practices in the buy-to-let sector, particularly through tailored green mortgage products that align with both regulatory demands and landlords’ unique needs.”