Landlords well informed of EPC changes - Mortgage Introducer

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However, he added that there will be some that have not read up on it extensively yet.

Cooper said: “It is important that the industry spreads awareness so that it does not surprise landlords, and they can start exploring what needs doing with their portfolios.”

A consultation by the government has proposed raising the minimum EER for private landlords to C, up from E, applying to new tenancies from 2025 and existing tenancies from 2028.

It also proposed a cost cap of £10,000 per-property – this means if a landlord spends £10,000 on recommended measures to improve energy efficiency but still does not achieve a C rating, they are exempt from the requirement.

Getting a rental property up to standard will, for many, take time and, in some cases, significant funds.

Cooper said: “We are seeing a wide spectrum of changes that may be required, from simple things like replacing lightbulbs with high efficiency ones, to substantial and time-consuming projects like replacing the central heating, rewiring, the installation of new boilers, and double glazing the windows.”

The consultation proposes maintaining a set of exemptions from the rules to ensure that costs are proportionate and fair to landlords.

For example, landlords do not have to carry out a recommended measure if doing so would de-value the property by more than 5%.

In addition, new landlords are temporarily exempt from the rules and some listed properties do not need to comply.

Cooper believes that many landlords will be actively looking for advice on how to manage their portfolios as the market moves towards a post-pandemic environment.

As a result of this, he thinks it is the perfect opportunity for many brokers to begin conversations about the EPC ratings of clients’ properties.

“Large scale renovations can take two to three years to complete so mapping out a plan may be needed,” Cooper added.

Cooper went on to say that taking EPC ratings into account will now benefit landlords, as it will ensure they get the right portfolio management and remortgage deals.

This is not just for their current business needs, according to Cooper, but also considering any additional funds required to comply with the new rules.

The consultation is part of a wider package of proposals, including a drive for mortgage lenders to publish EER data and meet average EER targets by 2030.

Overall, Cooper said Aldermore Bank has seen landlords show great resilience throughout the pandemic which has put many in a strong position going into 2022.

He said: “Due to the increased emphasis on our living spaces going forward, people will need, more than ever, quality properties to rent meaning there are growing opportunities for landlords.”

The EPC ratings will bring some challenges requiring management and planning, but Cooper is expecting most landlords to find this manageable. He added that he has also seen, in the last year, notable house price inflation – and this means capital growth for landlords. This capital growth can be leveraged to support any retrofit costs to bring property up to EPC requirements or assist in seeking funds for portfolio expansion.

Cooper said: “We may see some landlords seek to rebalance their portfolios to help mitigate against risks presented in specific sectors, such as student lets, which were affected by the government’s work from home directive in 2020.

“In addition, the new build sector may now appear more attractive to landlords with the benefit of already having much higher EPC ratings.”