Landlords believe that energy efficiency upgrades necessary to comply with new regulations may cost up to £10,400 per property, research from Aldermore shows.
From 2025, all newly rented properties must have an energy performance certificate (EPC) rating of at least ‘C’. This deadline is extended to 2028 for existing tenancies.
Failure to comply will lead to a property becoming unrentable.
The lender carried out a survey of 800 active landlords on this subject, finding that 62% are “fully aware” of the new legislation and 25% are “somewhat aware”.
Currently, 40% of rental properties do not come up to scratch, having an EPC rating of ‘D’ or lower.
To remedy this, landlords with properties below ‘C’ rating believe it will cost an average of £10,400 per property.
To pay for this, 71% of landlords intend to use savings, while 25% will look towards government funding. Nearly a quarter – 23% – will increase rent.
And when asked what their intentions are with below-spec property, 35% say they will upgrade at the minimum cost required, while 32% will spend what is necessary to create long term value. Just 15% will look at selling their property or not renting it out.
Aldermore’s report also states that new build may become a preference for investors because 65% of landlords say they are now less likely to buy a property with an EPC rating of ‘D’ at most.
Aldermore director of mortgage distribution Jon Cooper says: “With people’s lives revolving more around their homes than ever before, a robust private rented sector has never been more vital. The data suggests the looming EPC change will cause challenges, but the more support landlords receive from brokers and lenders now, the easier it will be to navigate.
“Encouragingly, awareness appears high among landlords so many will be thinking about what changes may need to be done already. As we move towards a post-pandemic environment, many landlords will be looking to the future, so it is the perfect opportunity for brokers to have conversations with their clients about the EPC ratings.
“This will ensure, where needed, a plan for financing can be mapped out to assist landlords in getting non-compliant properties up to standard.”
