Government plans to force rental properties to reach a minimum energy efficiency level but make landlords pay for much of the work have been criticised by the NRLA.

The trade body reminds landlords in England and Wales that the proposals will see all new tenancies for rented properties in the UK mandated to reach an EPC band C by 2025, with existing tenancies included three years later – and that landlords will have to pay up to £10,000 of the initial cost.

As LandlordZONE reported earlier this month, such crippling costs could see thousands of landlords who cannot afford this cost quit the sector, while research published earlier this year by Rightmove showed that 59% of PRS properties have an energy rating below a C.

The NRLA is warning that the planned cap is based on a misguided assumption that all landlords are property tycoons with deep pockets, and that its research shows that private landlords make an average net income from property of less than £4,500 a year.  

The NRLA says landlords should be expected to contribute to be linked to average market rents in each area – known as broad rental market zones – based on official data.

Taper

Under the NRLA’s proposals this would mean a landlord’s contributions would taper from £5,000 to £10,000 depending on the different rental values and by implication, property values, across the country.

Also, the landlord body says Ministers must developer a decarbonisation tax allowance, remove VAT from energy efficiency and low carbon upgrade bills and cancel council tax where energy improvements are being made to empty rental properties.

nrla ben beadle new pic

“The Government’s proposals for the sector are not good enough,” says Ben Beadle, Chief Executive of the NRLA (pictured).

“They rely on a misguided assumption that landlords have unlimited sums of money and fail to accept the realities of different property and rental values across the country.

“Ministers need a smarter approach with a proper financial package if they are to ensure their ambitious objectives are to be met.”

Read the recently-closed proposals consultation guide on EPC minimum requirements for the PRS.

22 COMMENTS

  1. Govt thought that most University courses would not cost £9k when they raised the bar – they were wrong. Students now leave Uni with huge debts.

    Govt thinks most LLs will pay £10-£20k per property to upgrade to an EPC C – they are wrong. Tenants will be left with huge rent increase or worse – nowhere to rent.

    When will the Govt learn to listen to real people not just their yes-men?

  2. The Government is proposing these things, but the average builder does n’t know how to improve EPC rating other then basics such as loft insulation, LED bulbs and double glazing…..

    Where is the training for builders and landlords? Get two experts and they will tell you different things and contradictory about things about how to improve energy efficiency.
    There is no consistency between EPC surveyors.

    A bad job can create a situation where mould is growing in the property. Homes needs to be breathable…..

    If Climate Change is a problem for all to solve, then why are landlord the only one targeted? Why not home owners too?

    The Government increased taxes and regulations on landlord. I would rather spend the money on energy improvements rather then tax advisors. Why does the local council need to charge a £1,000 license fee to rent out a property?

    In order for me to carry out major works, I need to have vacant possession of the property. I don’t have a facility where a tenant can move out to another home, until works are done.

    Everything is feeding into higher rents…..

    The people deciding all these things are people sitting in the Government offices, they need to get to the field.

    It is also crazy, getting me to do energy efficient works. Paying £10,000+. Whilst at the same time, giving polluters a free ride. Rishi Sunak got rid of passenger duty for those flying the UK (rather then taking trains). He said long haulers flyer would pay extra for pollution, but for a flight to Australia it is only an extra £5. Someone flying to Australia is creating the same amount of CO2, as someone using a car for an entire year!

  3. what annoys me most is the bar for landlord properties is set so much higher than it is of owner occupied. Why should we be treated any differently? Given a 2050 target of net zero, why the mad rush? All this is going to do is produce a pop-up industry of overcharging cowboys who will simply rip landlords off. Surely the solution is to put together a well thought out strategy for all housing and support the long-term growth of industries by undertaking this work over a sensible timeframe.

  4. Well said, M Byrne. But what is the strategy for old, say Victorian houses like my own, with solid walls and no scope for further savings after double-glazing (at a cost), loft insulation and low energy light bulbs? Do we tear down whole streets and rebuild? Can’t be done.
    We need to focus on making trains cheap and efficient and cutting air travel, gas-guzzling cars which also block our streets, and sensible targets.

    • Here are some of thing that would need to happen: dig floor up and insulate and run underfloor heating . Put in a heat pump. Rip out EVEYRTHING that is on the inside including the electrics & plumbing – literally get back to brick. Fit an inner wall to all the exterior walls and insulate. Do 1st and 2nd fit of electrics and plumbing. Plaster, skirtings, architraves etc. Repaint. Put back the bathrooms and kitchens – except of course they won’t fit any more because all the rooms are smaller having lost space to the new interior wall so NEW bathrooms and kitchen. Put new double glazed windows in if you still have the old sash ones. This will cost HUNREDS of thousand of pounds not tens of thousands. And assumes you can find a builder and the trades – “currently, 59 per cent of homes have a D rating or worse” according to thisismoney , June 2021. And assuming you can live for a year without any rent.

      What could possibly for wrong?!

      • Anna – absolutely correct. I tell people this frequently and say at least do some of these things FIRST before having a heat pump and avoid the shysters just trying to sell you a heat an air source heat pump at all costs. It’s not cheap getting an old property well insulated especially considering internal or (even more expensive if feasible) external wall insulation which is why these sort of works should have been stated 20/30 years ago! when we first knew about global warming but no government was really serious about the threat (not a vote winner). Our building regulations should have been beefed up to to include a far higher standard of insulation for new builds too (not popular with the big developer lobby though).
        Governments of all pursuasions have done too little and dragged their feet so now are panicking and rightly too. As climate change progresses, more and more of the world’s population is going to be affected (including increased flooding in UK) & drought (increasing food prices) world wide. Unfortunately, it is not until the problem arrives at our doorstep, that most people feel the need to do something, then they will blame others for not doing something sooner. We are all going to have to make sacrifices and make uncomfortable choices. As always, this will be harder on some than others but if we don’t, nature will do it anyway!

  5. We need a well written government petition. If enough of us sign it has to be debated in parliament. Could someone start one on change.org or somewhere?

  6. My rents will remain the same, how ever any further costs of £1000 to increase the epc in very old houses will be met by the sale of the property. And I will not be re investing.

  7. The entire initiative is woefully flawed in so many respects. My properties are C’s and D’s. The most energy efficient (and I know because I live there) is a D. Nobody but an assessor would be able to differentiate. One has old double glazing which lets in draughts. I am looking to replace them, because I want to look after my valued tenant, but I don’t need to – it’s already a C!!! Apart from this, the rest have decent double glazing, good insulation and well maintained gas central heating – all you need for a cosy house. In the name of the government’s ridiculously stupid green initiative, I will presumably be expected to scrap perfectly good boilers (in itself terrible for the environment) and replace with mega expensive (grant funded or not) heat pumps containing mined materials, transported, fitted, all detrimental to the environment, which will take up loads of space and won’t heat the houses properly. Crazy!

  8. I have no option my 1 rental property will be getting sold ,so much for my financial ideas to boost my pension ! I haven’t even got there yet.
    my property is in Liverpool so I can not even put the rent up much too cover cost . I have done everything I can financially to raise EPC but cant afford to go up to C .
    Cant afford external insulation ,air/ground source heat pump,an roof wont take solar panels
    I am at moment in between tenants , no income at all and scraping last of my savings on improvements.
    I cant even claim a benefit while house is empty cos I own the house .
    If I knew it was going to be this difficult would never have kept the house.
    I hope the government sort this mess out soon I am going grey and a total insomniac with worry

    • Plenty of people are in the same boat Ruth . A Heat pump will not help with your EPC rating under the current method of assessment. EWI isn’t without issues. Many properties that I have looked at with EWI have damp and mold problems. some is fitted with a strip of UPVC across the top with silicone to seal it. When the seal breaks down, water ingress can occur which has a detrimental effect.

      I wouldn’t panic, Id rent the property until the deadline. If you have good tenants, extent the let to 2028 and see where we are with it then. At the very least, that gives you 6 years more rent that you can either spend on the property or adds to your income until you finally sell up.

      At least by 2028, we’ll have more idea about how the EPC will be assessed in the future and whether a sliding scale of assistance (grants) can be negotiated.

      Hope this helps

  9. To illustrate how ridiculous the EPC scores are I have the following 2 houses.
    My home is a detached house, built in 2004 with solar panels and an EPC rating of B90 occupied by me and my husband.
    One of my rental properties is a detached house, built in 1951 with a flat roof and an EPC rating of D63 occupied by 3 young professionals. Bills are included in the rent.

    I found gas and electric bills for both properties from 6 years ago, took the readings and averaged the consumption of both houses for the 6 year period. That allows for tenant changes and different usage, etc so should be more indicative than a shorter time frame.
    My house averages 2930KW electric and 14300KW gas per year.
    The rental averages 2567KW electric and 11175KW gas per year.

    The EPC on the older rental property is so bad because the assessor assumed the flat roof is uninsulated. It clearly is insulated but because I don’t have documentary proof of how much insulation is in the roof structure the assessor assumed none. Apparently it doesn’t matter that in reality it uses far less gas and electric than a property with a much better EPC score

  10. I have sold my properties and this was the nail in the coffin. There will just be less houses to rent, higher rents and much more homelessness. It’s not hard to work out is it?

    • I wouldn’t worry too much about it Roger. The costs of the work needed to make these upgrades is huge – hundreds not tens of thousands. The government can only make a small token gesture that will cover a fraction of the cost so Landlord will simply sell those properties.

    • As tou may be aware LL invest for PROFIT!

      These dopey EPC C status requirements are ridiculous.

      Most LL properties can be cheaply improved to D status.

      Beyond that is unviable.

      LL will not be able to increase rents to pay for the excessive C status costs.

      The C status is unviable for most LL.

      It makes far more business sense to sell up.

      Even with Govt assistance it still makes no business sense.

      The only logical sense remaining is to sell up.

      Let FTB go to the expense of improving to C status.

      A house will be worth the same with or without EPC C status.

      The yield that most LL make on sub C status properties is low enough not to bother with improving to C status as no additional rent will be achievable.

      In short sub-EPC C status properties aren’t worth retaining.

      Perhaps Councils could start buying up all these dud properties as Councils won’t be required to meet EPC requirements.

      There are easily over 2 million of these dud properties councils could restore to the social housing sector.

      Govt could reduce sale prices by reducing CGT.

      Councils would get cheaper properties with Govt taking a loss on CGT.
      But politically it would play very well if 2 million properties were added to the social housing sector almost overnight.

      Govt just needs to fund councils to buy up all the dud LL properties.

      How councils would sort who occupies the properties god only knows!

      But overall selling up all these dud LL properties makes far more business sense than retaining them.

    • Rents will increase as more landlords sell up and the remainder have to cover cost of improvements – simple economic principles – demand and supply.

  11. I saw the writing on the wall over 5 years ago… sold all old properties and re-invested in C rated. Only one D left in the portfolio.

    Good for me personally however this action did nothing to improve any of the properties I sold. The govt hasn’t really improved the Energy Efficiency of properties simply encouraged smart investors to move their money into Energy Efficient Properties rather than improve their housing stock.

    • I’d suggest you were a shrewd old mover!!

      A pity other LL didn’t follow such a strategy.

      LL will very soon be faced with unlettable properties.

      Covid issues will seem minor in comparison.
      A dud property will need to be sold. A distressed sale will not achieve full market value.
      Best to sell as you have done before everyone realises the worthlessness of Sub EPC C status properties.

      Any CGT will be a minor detail compared to the reduced value of sub EPC C status properties

      As you have done LL need to sell up now or improve to C status.

      I suspect that in the coming years any property with less than C status will be valued far lower.
      Be interesting to hear what EA have to say on the matter.

      They already downvalue any property still occupied by tenants if up for sale.

      But you have definitely shown the way most LL should behave.

      Had I been in a similar situation I would have followed your pragmatic example.

      • “I suspect that in the coming years any property with less than C status will be valued far lower”

        To me that has to be the case because if both Investors and Joe Public are interested in a particular property class that has to push up prices in that sector and conversely reduced demand in non EPC D or below surely must reduce the price accordingly.

        Same thing happens with listed properties where the perception of high maintenance costs means they are cheap as chips compared to modern places.

        What surprises me is that much of the info around EPC’s and direction of travel has been out for close to a decade, the only change was govt decided to speed up the move to C yet many investors seemed to have sat on their hands and seemingly continue to do so.

        For me personally I have a simple upgrade on one EPC D property which will be done next year and I’m set fair and just waiting for the huge rent rises that will come as the rush to offload “Dud” properties creates a huge shortage in available properties for rent.
        All properties in the portfolio were built after 1990, zero pre or post war property. 10 years ago I owned Georgian stuff… no longer!!

        I leave those for others to deal with… Not my problem anymore!!!

  12. Our emotions and decisions are all based upon the current EPC system of measurement, which is based upon COST efficiency of a property. Hence, a nice combi boiler providing GAS central heating gets a big tick because gas is cheap (even after recent increases). However, the current push for using electric and air conditioning (air source heat pumps etc) completely contradicts the EPC since they are expensive to run!
    I have two properties, nearly identical, same house builder, same estate. One has gas central heating. The other doesn’t have gas but has E7 storage heaters, providing lots of heat for my tenant who’s at home most of the day in the latter. One is an EPC grade C, the other is an EPC grade E (top score). You can guess which is which.
    So I have until 2028 to decide on the one that’s an EPC E, since my very longstanding tenant will still likely be there. I get the feeling, if it is treated logically, that the EPC ratings and measurements will be overhauled.
    Good or bad, it can’t get any worse for me. So I’ll hang on for now to see what changes come over the next 5 years or so, if that long.
    The only other thing to push me and my tenant out of that property, will be an announcement to abolish Section 21.

  13. Have heard that the interest rate or ability to get a Buy to Let Mortgage will in the not too distant future be linked to the EPC rating. So if you leave it closer to the deadline to sell you may only be able to sell to a cash buyer on their terms. Scary fire sale price!

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