Housing Secretary, Michael Gove, recently suggested that the Government should relax the timescale for the new Energy Performance Certificate (EPC) regulations claiming that they are putting unrealistic pressures on landlords to potentially spend thousands of pounds on their property portfolios to meet the energy efficiency targets. The Government have since announced that the EPCs need ‘fundamental reform’ which may mean that the pressure is being taken off private landlords after realising that meeting the guidelines on some properties would be ‘physically impossible’.
Back in 2020, the Government announced plans to increase the Minimum Energy Efficiency Standards (MEES) for the Private Rented Sector. The proposals outlined that private rented properties would need to have an Energy Performance Certificate (EPC) of C or more by 2025 on new tenancies, and 2028 for existing tenancies.
Many landlords have warned that they will sell up rather than spend thousands trying to meet the EPC grade. In June the Government stated that they would have to wait many more months to find out the full details of the proposals and recent research claims that as many as 63% of landlords plan to sell properties rather than improve them to meet new EPC targets, which could lead to a shortage of rental properties.
Partner, Neil Hogbin, who works in our property management team, said: “We are already beginning to see a shortage of rental properties in the marketplace as landlords start to sell up. Combined with the increase in energy prices because of the war in Ukraine, there is a further threat that rents will continue to rise to cover some of the costs of the EPC improvements being forced upon private landlords as they scramble to meet the new energy efficiency targets being set. Decent homes in the private rented sector will no longer be affordable to many.”
“We all want to see properties as energy efficient as possible, but the sector needs certainty about how and when this will happen. Landlords are looking for a financial package to support improvements in the private rented sector but, it is all still very unclear. Meanwhile, the owner-occupied housing sector has no minimum energy efficiency requirements at all.”
“Many of the EPC changes are simply not practical, affordable, or wanted by many tenants in period property, which affects most of our clients. It is seen as being unfair that the private sector landlords, many of whom provide high-quality well-managed homes, should have to deliver on EPC targets ahead of other sectors of the housing market. They are already taking steps to be more environmentally conscious with low-carbon heating systems, and well-insulated homes where sensible and cost-effective to do so and shouldn’t need to be regulated to deliver on this.”
Research has revealed how landlords are now investing in properties with an EPC rating of C or above to meet these impending new Government rules and are actively avoiding lower EPC-rated homes. The survey also showed that 80% of landlords are aware of proposed changes to EPC legislation, compared to 65% last year. The Government have revealed that the likely cost of EPC upgrades for rental properties could work out at between £5,000 and £15,000 depending on the property with only a third being improved for under £5,000. Older, period property, is likely to need far greater expenditure than more modern housing stock.
Neil added: “Smaller landlords with just a handful of properties may sell up, but those with bigger portfolios need to plan for future expenditure on the necessary improvements to increase the EPC rating of their lower-rated homes and certainty is needed on this now. We are urging people to get in touch with our experts who can support them to review their portfolios and offer advice to help them preserve their assets in the long-term”.
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