A lack of understanding of the requirements around energy performance certificates (EPCs) and forthcoming regulation may hinder the government’s efforts to increase the energy efficiency within the private rented sector.
This is according to The Mortgage Works’ latest buy-to-let report. A poll of 1,000 UK landlords revealed that nearly two thirds (62%) are unaware that having an EPC is a legal requirement.
As to specifics of what the energy efficiency requirement must be by 2030, only one in three (33%) knew it was a C rating. Nearly three quarters (73%) of landlords also don’t know the proposed dates when the new regulation comes into force.
The research indicates landlords would value help in understanding the new regulations and advice on how best to pay for property upgrades. Half (50%) of landlords said they would benefit from signposting to grants and financing options to pay for the improvements required.
The survey also shows that while 45% of landlords with a property rated D or lower aim to bring some or all of their properties up to an EPC-C rating by the government’s deadline, over a quarter of all landlords (28%) plan to sell.
More than half (54%) of landlords intending to upgrade their property are waiting until the end of the government consultation or when requirements become law before taking action.
Nearly two thirds (63%) of landlords are unsure of how much money they’ll need to spend to bring their properties up to an EPC-C rating. More than one in five (21%) believe they will need to spend up to £6,632 on average, depending on the property’s current value.
Over a third (37%) of landlords believe they will need to raise rents to cover the cost
Undertaking the work needed is also likely to cause disruption for tenants to various degrees. According to the survey, 17% of landlords will need to evict tenants to complete the works, presumably where the works will be so intrusive it would be unsafe to remain.
There has been significant conversation on the limited rights a landlord has to evict tenants once Section 21 is abolished. Therefore, it may be that landlords are unaware refurbishment will remain as grounds to evict tenants.
Action points
The Mortgage Works is calling for three areas to be addressed to ensure that the government’s ambitions are realised and landlords are adequately supported.
To support effective implementation, more time should be factored in between completion of EPC reform and new Minimum Energy Efficiency Standards regulations coming into force.
A phased implementation which tackles the least energy efficient properties first and allows capacity in the retrofit sector to build over time. The initial requirement should be for EPC E properties to be upgraded to EPC D by 2030. Requirements could then shift to EPC D properties with the aim of all rental homes meeting the EPC C target by 2033 or beyond.
A rethink on the single national cost cap – setting the maximum landlords are required to spend on improvements- currently £15,000. The Mortgage Works insists this is too high and argues the cap should be reconsidered and replaced with an approach which recognises the complexity and diverse nature of UK housing stock and owners’ circumstances.
The Mortgage Works head of buy to let Dan Clinton commented: “ Improving the energy efficiency of private rented homes is important but the significant logistical and financial challenges of upgrading 2.5 million properties must be acknowledged.”
He added: “Striking the right balance between environmental progress and housing stability is crucial. To safeguard continued investment and protect tenants from higher rents or reduced supply, landlords need clear guidance, adequate support, and sufficient time to make their properties greener.”
