Landlords should be worrying more about the upcoming energy efficiency targets than proposed rental reforms, the National Residential Landlords Association chief executive has warned.

Speaking on a Hamilton Fraser property podcast, Ben Beadle said the impact of paying for retrofit work as well as having to temporarily re-house tenants, or not being able to do the necessary work, could be hugely significant for both individuals and the sector.

The government has proposed that private rented properties will need to meet EPC band C for new tenancies by 2025 and for existing tenancies by 2028, with a cap of £10,000.

However, Beadle said that as most landlords’ annual net income was £4,500, it would mean giving up two years’ worth of revenue. “Landlords are willing to play their part, but the £10,000 cap is too high. There also has to be recognition that for a 1900 Victorian terraced house, sticking in a heat pump may not be the most elegant solution.”

Significant factor

He added that while landlords would adapt to changes in the Renters Reform Bill, the new energy rules could prove to be a very significant factor in their decision whether to remain in the market, and the government – inadvertently or deliberately – reducing supply of the PRS.

“If you need to do retrofit around a tenant, landlords will be availing of Section 21 before it’s phased out with one eye on that, as retrofitting with people in situ is a monumental pain in the bum,” said Beadle, who added that it wasn’t certain what would happen if a landlord couldn’t make the necessary changes.

“Are you prevented from letting the property out? If you evict the tenant, no investor landlord will want to buy it if they know they can’t rent it out.”

Beadle said any replacement for the Green Homes Grant needed to be locally focused. “A national list of registers doesn’t work well; a new grant scheme could operate on a local basis, perhaps through the local authority where a landlord could get their own estimates.”

Listen to the podcast during which Beadle is joined by Hamilton Fraser CEO Eddie Hooker and Landlord Action’s Paul Shamplina.

21 COMMENTS

  1. I disagree.

    Without Section 21, it makes it hard to get a property back. I have both good and bad tenants. If I ask a good tenant, I want the property back, they will leave.

    With a problem tenant, who is n’t looking after the property and damaging it, not allowing inspections, complaining to the council and being abusive, then it makes it hard to get the property back.

    EPC are another source of annoyance. It is n’t an easy fix and requires major renovation to the property on top of the existing regulation and taxation. The Greens wanted extra taxation on landlords, for what purpose. I would have rather spend money on the next challenges as Climate Change. They think there is an infinite amount of money.

    Climate Change is a big issue, why make this only the problem for landlords? Why not home owners?

    Campaign groups who keep pushing for all this extra regulation, are making tenants pay for this via extra rent.

  2. I simply don’t have the money to upgrade and that’s the end of it. My properties aren’t worth spending £10k on as I would be long dead before I recouped the outlay. Some of my tenants will never be able to buy their own property, so I hope the council will be able to house them.

  3. I sold my 100 year old detached rental property that I’d kept in good condition for 30 years. I was an accidental landlord after a divorce and failed with a lovely small second property refurbishment after the government tax reforms for landlords. My most recent tenant allowed two slow water leaks to happen while not allowing inspection due to covid and an isolating elderly relative. The house was a broken mess and I was accused of neglect and invasion of privacy when I finally got to my house and threats of legal action while I was a full time carer for my father, which I just couldn’t handle at the same time. The tenant left and I spent nearly 3 years’ rental income putting the house right. I sold it because the external insulation quote during the government scheme would have cost 1 1/4 years rent to get from EPC E to D then when heat pumps are mandatory another 2 years rent. While caring for my dad I was relying on the income but the situation just became untenable. I’ve always invested 10% income back in the property and kept it in good condition. The property market boomed so I got out and paid my fair share of CGT. There are good landlords out there and we suffer because of the few. I’ve always responded quickly to issues and communicated fairly. My story isn’t going to be unique but I feel for those now facing the next 10 years without government support and a view of landlords as an unnecessary evil. My Greta grandfather was a tenant all his life and I’ve been accused by relatives as a problem while not understanding the mutual need for us both in society.

  4. EPC C will force huge numbers of LLs like me, nearing retirement, to sell up. New LLs will upgrade to EPC C as part of their refurbishment programs, they way I have done new boilers & DG over the past 20 years.

    The problem will be that fewer LLs will be entering than leaving the PRS so there will be a shortage of homes to rent & sky high rents. Those that can’t afford these ‘decent homes’ or with bad credit will be pushed into the sub-rental market where LLs rent out substandard housing at an affordable rent. The tenants won’t complain for fear of eviction and will put up with dangerous electrics, mould, leaks etc.

    Well done Shelter / Gen Rent / Acorn etc – look what you have achieved!

    • Come on Shelter Let’s hear your voice shouting loudly that you are going to supply all these tenants with homes to rent, instead of paying Poly Meade with extortionate salary.

  5. Come on Shelter, why don’t you just start to house tenants – do something useful for a change.
    Oh wait, because that would actually take time, effort & money.

    Old properties are not suitable for heat pump type central heating so where will tenants live in future?

    There will be huge issues ahead with lack of housing that meets higher EPC standards that Shelter & their ilk demand.

    • Unfortunately, it is not in Shelter’s interests – or should this be “those within Shelter” – to do anything more than effectively continually lambast Landlords for any and everything, because that is effectively their interpretation of the remit on which they operate in order to obtain the very high level of funding from Government, which for some translate to high salaries.
      They have never acted as a pro-active force to work closely with Landlords in order to try to help resolve some of the many issues that prevail with the housing situation in the UK, which is a shame, because, to date, the majority of Landlords have jumped through all the hoops that have been presented to them in a bid to comply with all impositions placed upon them, but, one gets the feeling that the goodwill demonstrated by Landlords is beginning to wane now.

  6. It’s a difficult one, I agree and it seems like all parties have it in for landlords without realising the consequences for both tenants and the housing market.

    I have BTLs split between private and social tenants. The flats I have with social tenants have all benefitted from green grants that have cost me nothing and the flats have been upgraded to almost C status so little left to do.

    The one property I have with private tenants will not benefit from any grants so I am looking a thousands fitting EWI and, potentially, a heat pump although the age of the property means it will be next to useless.

    I bought very well and renovated them all to a good standard and, even after spending the money, I will still have a lot of equity in them so they will remain a good asset. However, if this government and subsequent ones, keep up this punishment I will sell up and stick the money where they can’t get it.

  7. Rarely is it worthwhile LL improving to EPC C status.
    Far better to sell up or convert to non-AST letting.

    Many LL are near the end of their investment timeline.
    Better to go now and pay the lower CGT.

    CGT for LL will be increasing massively especially if Labour win the next GE.

    There are so many negatives remaining a LL with AST lettings……………time to move to other ways to profit from property investment.

    AST letting is not the only way to exploit residential property assets.

  8. One of my rentals was built in 1895 , terraced house. New double glazing 2015 condensing boiler 2016.still gets a D . I will not go to the expense of external cladding. I have informed the current tennants of the possible new regs . My intention will be to sell after 2025 and before 2028. Hopfuly I can transfer them to a new property with the sale as they are good tennants. I’m not convinced about external cladding not causing damp problems.

    • Leaving it til 2025 will be too late.
      CGT is increasing.
      The very real threat of Labour winning the next GE.

      S21 going.
      You need to get out now.

      There is no way that any CG or net yield will equal the far higher CGT and EPC C status costs.

      Get out now before everyone realises why LL are getting out of the game.

      Leave it til 2025 and you will be too late as every other mug LL rushes to sell up.

      Currently houses are scarce and are much in demand.
      Take advantage of that demand now.

  9. One factor that, in my experience, is overlooked is the criteria applied to the “surveys” from which the EPC rating/s are derived. As a result of the EPC’s that I had in place were 10 years old, I arranged for new EPC’s to be done and, when I received the certificates I noticed that loft insulation and that in flat roofed areas were designated one star with the accompanying statement “No insulation assumed”. On checking this facet with the so called “surveyor”, his response was that he/they are advised that the surveys should be non-evasive!.
    In my own case, many of the properties assessed were determined to have an EPC rating of a “D”, whereas it is very likely that, had the surveyor actually undertaken a thorough job and looked in the relative voids wherever possible, the ratings could have readily achieved a “C”.
    So, because the majority of my properties are of solid stone construction – as is indeed the case in many less affluent areas of the UK – I, as a direct result of the so called “guidelines” provided to those undertaking the EPC checks, will be faced with having to spend large sums of money – the guide stated being between £4K and £14K on internal/external insulation – which, had the EPC’s represented a true reflection of the properties as they actually are, would not be required.
    In short, EPC’s have to reflect the actuality of what is within a property without omissions that could have readily been observed. We, Landlords and property owners are being fleeced by an inept “system”.

  10. I am an agent, a landlord and a tenant. We have many good old sandstone houses which are actually warm when heated correctly but produce terrible EPCs as they are flawed. To bring most up to C rating will cost £20k plus so the landlords will sell and those who hold on to the properties will see rents rise dramatically. It puzzles me why if this is an environmental issue, which is what it is sold as, why hit 12% of the housing stock and leave 88% untouched it does not make sense. I listened to a “green expert” recently on the radio saying that and I quote “the heat pumps use a little bit of electric” I nearly crashed the car. I have experience of four of these useless things and 1) they dont produce enough heat 2) current radiators are useless as the heat is lower and you need larger radiators 3) the electric cost running these is higher than the gas and oil previously used. Basically we have a flawed policy all round and a flawed EPC model.

  11. I have no doubt there is a hidden agenda to force small landlords out of the market, the ending of no fault s21 will be the final straw for many as how do you get hold of your money if you can’t get tenants out ?
    Many landlords are selling up ,reducing rental properties which will ultimately make many families homeless.
    I don’t think the government has realised what is going to happen because of their idiotic ideas.
    The ridiculous upping of epc’s to grade c is another ill thought out idea , I can’t believe the government is going forward with this, it’s madness!!!!

    • It is hardly a hidden agenda.
      Govt has stated it intends to get rid of small LL.

      Such small LL should comply.

      Sell off and deleverage to produce mortgage free rental properties.

      Then they can be used for

      AirBnB
      FHL
      SA

      Remove the leverage and regain control over the property asset.

      It makes perfect business sense for a LL with 5 properties to sell 4 leaving just one mortgage free asset.

      The power of leverage evaporates when you CAN’T easily get rod of a feckless rent defaulting tenant.

      Mortgage free is the ultimate business resilience.

      LL should reduce the PRS by at least 50% which is currently leveraged.

      Go mortgage free and create millions of homeless tenants.

      As a mortgage free LL you will be inundated by tenant demand.

      LL should aim to create millions of homeless tenants.
      Getting rid of leverage would be a fantastic way of achieving this.

      50% of the PRS is leveraged.

      If every mortgaged LL got rid of all mortgage debt by selling up or paying down by selling up there would result gratifyingly millions of homeless tenants.

      BTL landlording is clearly a business model the Tories DON’T like.

      So all go mortgage free substantially reducing the numbers of rental properties available.

      Then Govt can work out where they will house the millions of homeless tenants!!

  12. EPC Regulations / changes have been on the cards for over 10 years. The only difference was that govt recently changed by resucing timescales for works to be done.

    I took action ages ago, selling off EPC below C and recycling the money into modern properties, the costs of solicitors etc was far cheaper than any potential upgrade costs.

    Simply sold up and re-bought modern properties. today all the portfolio is rated C apart from one which will be upgraded in the next financial year.

    Every landlord had this opportunity and still do.

    People don’t continue to drive old cars when the MOT’s become increasingly costly they get new ones!!!! Whats the difference?
    Get rid of “Challenging” properties….

  13. Grow up. this was a disgraceful podcast. Ben Beadle was plugging the NRLA and Hamilton Frazer were plugging themselves. Paul Shamplina was being his usual useless self, and they all laughed and joked as if it was a Sunday School party. I am disguisted that we have insured our property with you. Grow up! Smell the coffee and deal with the problem. Put you all together and you will not make a good one. Nothiing new in what you said. The NRLA is firmly in bed with the government, Name a subject they have actually achieved success on when so called trying to make the government move on for the good of Landlords? Home for Landlords!!!! more like a mental home for Landlords!!! None of you care, you are just there to make money at the Landlord’s expense. and if thhat was not bad enough we have Julie James’ draconian Act! Beryl

  14. I have one large Victorian property, (no mortgage, paid cash) I rent out…immaculate condition, just installed £8,000 Wickes kitchen, retailed the floors,…just every upgrade imaginable. Was considering buying 3 more to let. ABSOLUTELY decided against doing so now. Let the Govt provide housing and use taxpayers money instead of mine.

  15. Prof. D S Emmerson: Energy Performance Classification Consultation (“EPC”) – Contribution

    Comment on the Energy Performance Classification of Domestic Dwellings
    and possible future developments

    David Stuart Emmerson MA (Cantab) PhD (Leeds)
    Former professor of physics (retired)

    1: Introduction

    Current practice is that the Energy Performance (EP) of a domestic dwelling is assessed by a Qualified and Accredited energy inspector visiting the premises. His/her findings are input into an authorised computer program (the EPC algorithm) which calculates a single value for the EP on a numerical scale from 0 to 100 from the assessor’s observations. These numerical figures are banded into five colour-coded EPC ratings. The EPC algorithm has gradually been refined only slightly over the years since 2007.

    EP certificates, which have a 10-year validity, are publicly accessible at epcregister.com .

    2: Proposal for consultation

    It is proposed that the current mandatory requirement of an EPC rating of “E” for rented properties should be raised to “C”. If such is desirable, then one vital question arises:

    Is the present EPC algorithm fit for future purpose?

    3: The Position of the UK

    The UK is a world leader in tackling global warming and climate change, shown by three things:

    we will be hosting the 26th Climate Change Conference (COP26) in Glasgow 1-12 November this year (2021)
    a “build back greener” pledge by the Prime Minister is that, by 2030, all national domestic power needs shall be met from renewable sources, which implies all-electric homes, with current domestic fossil fuels (methane gas/oil/coke/coal) having been phased out.
    an announcement by the Prime Minister’s office was that no [methane] gas boilers should be fitted in new-build homes after 2024/5

    4. The nature of the EP of a domestic dwelling.

    The EP of a domestic dwelling is a measure of the intrinsic energy performance of the dwelling itself (of which ground-source heating and/or roof-mounted solar heating if present are an integral part). An EP must be independent of external factors such as location: two otherwise identical domestic dwellings in different locations must have identical EPC ratings. The existing algorithm does achieve this. However:

    5. Major flaws in the present EPC algorithm

    However there are several flaws in the EPC methodology as it now is, some serious:

    5.1 The price of external energy purchased is factored in the EPC algorithm

    This makes a nonsense of the EPC being a measure of the intrinsic energy performance of the dwelling itself.

    We may note in passing that the Consumers’ Association (publishers of Which? magazine) has been testing appliances such as washing machines for decades. CA ratings are based on laboratory performance only; the purchase price of an appliance is never a factor in any CA assessment algorithm.

    5.1.1 Gas and electricity

    A gas combi-condenser boiler servicing wet radiators is awarded points generously by the software algorithm. This is only because gas is – at the moment, though this may change – about a third of the price per kWh of electricity. But this is irrelevant to the intrinsic energy efficiency of the dwelling. In fact combi-condenser boilers have an intrinsic efficiency of about 85% (15% of the energy is lost as hot air, seen clearly blowing out of the external vent on a crisp cold morning), whereas electric heaters have an intrinsic efficiency close to 100%.

    5.1.2 Electric storage radiators

    All-electric domestic dwellings without a gas alternative are commonplace; high-rise blocks of flats have no gas for safety reasons (recall Ronan Point), and many street and suburbs are located far from a gas main. The number of all-electric dwellings will inexorably increase as domestic gas is phased out (see section 3 above).

    Fashionable in the 1970s, some energy suppliers still offer Economy Seven type night-time tariffs (commonly from 11:30 pm to 6:30 am). The present EP algorithm awards points generously for night-time “modern” electric storage heaters (“modern” only in the sense of having inbuilt controllable fans, but otherwise hopeless). This is only because night-time kWh units are cheaper. The software algorithm also fails to take into account in such tariffs that the day-time kWh units are correspondingly more expensive in order to subsidise the cheaper night-time ones! So whilst washing machines can be run overnight (although this is strongly discouraged because of a spate of serious spontaneous fires in unattended washing machines), showering, cooking, and supplementary heating all fall within the expensive 17 hours each day (6:30am and 11:30pm).

    5.2 Electric taps

    In the last 5 years or so, the tankless electric tap has caught on in the UK. Working on the same principle as an electric shower, a tankless electric mixer tap heats only the water which passes through it. (Tinton Life is one of the better-known brands but there are many.) If a consumer prefers his/her existing style of tap (singles or mixer), then there is an under-sink tankless heater option.

    Because tankless electric taps heat only the actual water drawn, they are very energy efficient (and relatively inexpensive – about £40 per tap). So they should earn lots of EP points; yet they are unknown to the present EP algorithm!

    The installation of electric taps should, in my view, be made compulsory in every new-build all-electric domestic dwelling.

    6. Conclusion

    Yes, of course the Energy Performance requirement of ALL domestic properties should be increased. But increased to what? A EP Certificate has a validity of 10 years, so one issued today must still be meaningful in 2031.

    The country is currently struggling under a grossly unfit-for-purpose algorithm which, amongst other things:

    rewards gas boilers (on the way to being phased out),
    rewards so-called “modern” night-time electric storage heaters (1970s with added fans), and
    is unknowing of tankless electric taps (the future).

    Professor David Stuart Emmerson MA, PhD
    Former professor of physics (retired)

    6th January 2021

    ekosen@outlook.com

  16. Came to this website as have 250k sitting in bank and due to inflation eroding value by the day,thought buying a property would be the way to go…

    Then I read THIS article and comments.
    So could you seasoned LLs advise someone in my postion what are other options?
    With prices on fire I want to take advantage before my savings become worthless.
    Apart from flipping, what are the other options?
    Is AirBnb an option? What about FHL?
    Paul Barrett mentioned SA ( I know it was meant as irony) what would that be?

    TIA

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