Half of landlords with properties rated EPC band D or below are considering selling property ahead of expected legislation that will require all rental properties to have an energy-efficiency rating of at band C by the end of 2028.

So says lender The Mortgage Works (TMW) which has polled some 600 landlords to gauge sentiment and appetite around the retrofitting of portfolios.

The survey found that 52 per cent of impacted landlords have thought about selling some or all of their properties because they don’t think they’ll be able to either complete or finance the works need to get their properties up to the required standard.

The government wants to increase the requirement to a ‘C’ rating for all new tenancies by 2025 and for all existing tenancies by 2028.

Size matters

TMW also found that landlords with larger portfolios are more likely to have considered selling some or all of their affected properties while landlords with just a few properties are least likely to have done so.

When asked what upgrades are needed to be made to reach a EPC band C, a third of landlords (33%) were in the dark.

For those that did know, 37 per cent said they needed to fit traditional insulation, while a quarter (25%) need to upgrade the boiler, with a similar number (24%) saying work involved upgrading existing utilities.

TMW has a motive for promoting the research – it has launched a service called Green Further Advance available to landlords with an existing TMW mortgage. It offers loans of between £2,500 and £15,000 up to a maximum of 75% LTV to pay for upgrade work.

Daniel Clinton (pictured), Head of Lending at TMW, says: “With less than four years before all new tenancies need to be in properties rated EPC band C or above, there are still landlords who need to undertake remedial work on at least one of their properties.

“They are therefore understandably concerned about how they will both fund the work, find someone to do it and have it completed in time.”

rent arrears

Timothy Douglas (pictured), Policy and Campaigns Manager at trade body Propertymark, says: “As domestic energy use accounts for 14% of overall UK emissions and 90% of homes in England currently use fossil fuels – improving the energy efficiency of the nation’s housing stock is one of the most significant challenges in reaching Net Zero emissions.

“The private rented sector has its part to play, but in recent years, landlords have faced considerable legislative change, and during a time of financial strain due to the COVID-19 pandemic, which will continue to have lasting effects, the costs of bringing housing stock up to EPC Band C will be a significant challenge for many.”

Read more: EPC ratings system ‘not fit for purpose’.

9 COMMENTS

  1. It is not just that the cost is disproportionate to the savings it is also the fact that the EPC assessment (based on cost not carbon) is the wrong metric to use and that the assessment is so opaque that there is no guarantee that doing the work will give you the result you require.

    Until there is clarity & uniformity in the assessment, predictable results from improvements and an actual saving in carbon emissions from the measures it is absurd to expect LLs to spend thousands of pounds on their properties.

    I will be selling & my tenants will be looking for new homes 🙁

    • We’ve already sold two and I’m already talking to tenants about moving their properties on. The uncertainty makes it impossible to plan so why take the risk? The problem we now have is that due to a lack of available rental property, rents are 15% higher than my tenants are paying and they don’t want to move out and pay a premium for doing so.

      Really good tenants who want a long term rent security are being done a disservice by an ill thought out, undefined nonsense policy. Another in a long list of government medling that in the end results in rental increases and harms the people they claim to profess to be protecting.

  2. Biggest issue for many is that there seems to be no way of knowing to what EPC level a property would get to if certain works were undertaken. I’m not going to risk spending £4k+ on a property in the hope of getting it to a C unless I know that it would succeed in doing so. The answer therefore is to sell which is what I am in the process of doing. This means less housing will be available to the PRS & so increased demand & so higher rents. This is making life worse for renters, not better.

  3. I watch the property market like a stalker and I’m sure that many of you will have a similar obsession. Certainly locally to where I live, it is not hard to see the high number of ex rentals coming to the market that will be more troublesome to improve energy efficiency.

    Moreover, I have local estate agents calling me regularly to ask whether I have potential voids. I am informed that they can fill my properties 10 times over and that potential tenants are biding above market rents in an attempt to secure a property.

    Personally, I see it as an opportunity to buy a property for less than market value and upgrade with a long term view. It’s more of an issue for me if a tenant is settled. Many properties in this sector will require work that is so invasive that it isn’t fair for tenants to live through it. Therefore, unless you have a void what are you going to do?

    Even if you have a void, if you can’t either fund the upgrades or secure trades, is more tempting to move the property on? It looks like that’s happening a lot however I may be wrong.

  4. So many EPC recommendations are mindnumbingly stupid, the system simply isn’t fit for purpose and often the assessors’ competence cannot be trusted. One example I had was when the EPC on an acquired house recommended cavity wall insulation. I arranged for an installer to come and do the work (then free), and the guy knocked on the door and told me it was obvious it had already been done (it took him about 10 seconds). I called the assessor and, after an argument, he checked his notes and admitted he’d made an error, and he had to re-issue a corrected EPC. Others have made recommendations costing thousands of pounds and involving massive upheaval to save a few pounds a year, with payback periods extending up to 100 years!

  5. Improving to EPC C status is rarely worth it for a LL.

    The current 680000 dud under EPC C status properties should be offloaded to dumb FTB or dopey LL.

    The payback for these dud properties is easily 30 years.

    It just isn’t worth it as a business.

    For OO it is as business dynamics don’t come into it.

    There is a great LL sell off as far as I am aware.

    Though I have heard there are some really dumb southerners rushing up North to buy up all these dud properties………………a fool and his money and all that!!!

    EPC C status will be devastating for tenants.

    FTB might pick up some bargains as LL flood the market in 2025 with all their dud properties.

    MEES will bring about a reduction in the PRS as nearly substantial as when LL sold up after rent controls and Regulated Tenancies.

    Tenant homelessness will massively increase.

    Shrewd LL will have sold up all these dud properties well before 2025.

    Wonder what the average net CGT will be from the average Northern dud terrace property?

    I’m sure the CG from a few of these dud property sales will be a decent amount to put down on a southern property that will be C status already.

  6. Currently I am in the process of upgrading a rental property built in the early sixties to hopefully comply with cat C EPC I am trying to be ahead of the game with this one, however it is proving near impossible to get the correct advice as each contractor has a different take on what is required in the way of insulation with each one offering different solutions for cavity wall loft and floor insulation with prices and time scale varying wildly.
    And that’s based on the contractors that have actually bothered to turn up.
    Based on my present experience don’t leave it to late to get your property EPC sorted in time, three years might seem a long way of, you’ll be sorry!

  7. I’ve got 4 rentals in Northern City. Current EPC ratings 2 x D at 66 and 67 pts respectively, 1 x E at 54 pts and 1 X C at 74 pts, so it could have been a lot worse. On the basis of the work recommended by the current EPC certs at the 3 properties currently at D or under, it there would be a cost of between £6k and £7k to bring the lot up to C, which is doable. I don’t really want to sell any of the properties, they are all in pretty good nick and with good longstanding tenants who feel secure in their homes.

    The massive question for me and other L/L’s is how much of an accurate guide to the extent and nature of the work required to upgrade a EPC banding, a current EPC cert is. Like a lot of you I’ve read the stories of new EPC cert assessments resulting in a downgrade with no work, or even with some work being done by the L/L. So a big issue is the question of how fit for purpose the current EPC set up is.

    Apparently the Govt is ‘looking’ at this one,and in November 2021 published a policy paper titled
    ‘Improving Energy Performance Certificates : Action Plan – Progress Report. I only came across this yesterday so have yet to read and digest.

    I won’t be making any decisions re keeping until I am sure that the money that I spend aimed at upgrading an EPC will actually result in this outcome – not a lot to ask, surely ?

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