x
By using this website, you agree to our use of cookies to enhance your experience.

TODAY'S OTHER NEWS

EPC woes – landlords faced with £10k costs to upgrade their homes

New research from BDRC BVA highlights the extent of the cost that landlords will need to rack up to get properties up to the proposed EPC standard.

The study, taken on behalf of Aldermore Bank, surveyed 800 active landlords. At present, domestic private rental properties must have an Energy Performance Certificate (EPC) of E or above.

However, proposed changes for 2025 will require all newly rented properties to have a certification rating of C or above, with existing tenancies needing to comply by 2028.

Advertisement

Cost of upgrades set to be high

According to the research, landlords believe that renovations needed to get up to code will not come cheap.

While there is a wide spectrum of costs, landlords that have properties below the EPC rating of C estimate it will take an average of £10,400 per property to get them up to standard. Nearly half (47%) say it will take £5,000 or less per property.

Cost of bringing properties up to EPC standard

%

Less than £1,000

7%

Between £1,000 and £3,000

17%

Between £3,000 and £5,000

23%

Between £5,000 and £10,000

26%

£10,000 or more

27%

The way in which landlords will fund these renovations will be mainly through savings, with seven in ten (71%) saying they will dip into their savings to pay for upgrades. Meanwhile, one quarter (25%) will do so through Government funding, 23% by putting up rent, and 11% by seeking a further advance from their mortgage lender.

Awareness of changes remains high among landlords

Interestingly, only one in eight (13%) landlords say they are not aware of the future EPC changes. Three in five (62%) landlords say they have a thorough understanding of the changes, with a further quarter saying they are somewhat aware but haven’t dug into the full details yet.

Number of properties in portfolios

% fully aware of requirements

1

48%

2-3

60%

4-5

66%

6-10

68%

11-19

64%

20+

70%

What landlords are doing with non-compliant properties

Landlords appear split on how they will manage properties that are currently non-compliant. Over a third (35%) say they would carry out works at the minimum cost required to comply, whereas a third (32%) say they foresee spending what is needed to maximise the long-term value of the property, even if it exceeds minimum requirements.

One in seven (15%) say they will not carry out necessary costs and either seek to sell or not re-let, and 2% will carry out the works to bring it up to standard and then sell it.

The EPC requirements have also meant future purchasing habits are likely to change, with two in three (65%) saying they are now less likely to purchase ‘D’ or lower-rated properties in the future. This could mean a trend towards New Build as a preference due to their higher energy efficiency specifications. 

Jon Cooper, director of mortgage distribution at Aldermore, comments: “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.”

  • icon

    For the life of me I can't understand what all the fuss is about landlords not being able to improve the energy efficiency (and therefore the EPC) of their investment buildings. I, like thousands of other professional landlords, realised this when EPCs were introduced way back in 2008. It not like the Government has sprung it on us!
    Over the years I've been spending some of my annual rental income on improving loft insulation and cavity wall insulation. I've used external wall insulation on one of my properties - the EPC up-lift for me and energy cost saving for the tenant have been extremely good.
    I've recently installed Dimplex Quantum night storage heaters in a rental flat. I've helped my tenant sign-up to an off-peak electricity tariff, which is a fraction of the cost of expensive 'day time' electricity'. Night storage heaters have come on massively since the 1980s and retain the heat all day whilst the tenant is out at work. It's a pile of bricks in a steel box and is ideal for rental homes where the tenant can be less than careful.
    A domestic EPC is an energy COST calculation, the worse the Grade the more my tenant has to pay to the NPower, British Gas (and indirectly the Qatari Royal Family and Vladimir Putin) and the less money they have to pay my rent. It makes good financial sense to drive down the money my tenants have to pay in energy costs. Don't landlords on this Blog understand this? Every single resi landlord mate of mine in the Thames Valley has either fixed-up their houses and flats to EPC Grade C or long since sold their 'difficult' assets and reinvested the capital in energy efficient homes (which can indeed be both older or modern buildings)
    For me and other professional landlords this simply is not an issue and not a problem. Relaxing Planning regulations so I and others can build a few more houses and flats for renters would be a far better issue for us all to campaign on.
    Domestic EPCs and MEES is NOT what rational landlords worry about.

  • icon

    All very nice and sounds like civil service propaganda. Sorry to say.
    Ever since humans first stopped using pretty stones for money it has always been a truism that you have to work hard for the best things in life unless you are exceptional. With all our new laws this has gone out of the window. Essentially, and this is a monstrous s implication, if you rent you do it with expectation that your landlord will provide everything that you need or just want. The end point of this will be that every house let will be a luxury property and the tenant will be perfect in every way as a matter of course.

    Sadly, landlords must be able to protect themselves from rent dodgers, cannabis growers and people who trash properties and live in filth. The way to do this is to offer a range of properties and include facilities for all these people. Needless to say, if you are a rent dodger or vandal you will only ever be offered slum properties.

    I won't moralise but where is the happy medium? There has to be one. The current logic is unsustainable no matter what you believe in. Bad landlords have had their day, fair enough but good landlords, as we all are of course, are fast becoming the victims of the tenants and surely this is just as much an intolerable situation.

icon

Please login to comment

MovePal MovePal MovePal
sign up