Rental properties with an EPC certificate below a band C are becoming more difficult to sell to other landlords, new research has suggested.

Conducted on behalf of Foundation Home Loans by BVA BDRC, it reveals that 71% of the nearly 1,000 landlords it quizzed said they were unlikely to buy a property which has an EPC rating of less than C, with portfolio landlords more likely to be wary of these homes than those with a single property.

Just 18% of landlords polled said they didn’t think EPC rating would be a factor in their buying decisions.
And unlike other areas of Government policy, three quarters said they were fully aware of the looming changes to EPC rules while 24% were aware something is changing and just 4% were ignorant of them.

Trying to sell a below-C-band rented property to another landlord is going to become a significant problem both before and after the rule changes, the poll suggests, and it involves millions of homes.

BVA BDRC found that the portfolio landlords it spoke to had on average 3.3 properties rated EPC D or below, with this rising to 9.5 for landlords with more than 11 properties.

Similarly, The English Housing Survey reveals that in 2021, of the nine million PRS households, most private renters lived in homes with a band A to C (44%) followed by band D (42%) while the remaining 14% lived in homes with a band of E to G.

Clarity

“While we still might be waiting for certainty and clarity over when the Government is likely to introduce its minimum EPC Level legislation for the private rental sector, it’s clear from this research that landlords are aware of what is likely to be coming, and are thinking seriously about their existing portfolios, how they might fund improvements, and what their plans might be when this is introduced,” says Grant Hendry (pictured), Director of Sales at Foundation Home Loans.

“With landlords anticipating a cost of over £10k per property to improve its EPC Level to C, it is perhaps not surprising they are disinclined to buy properties already below this.

“In effect, they are future-proofing their portfolios by opting onlyto buy C and above properties now, while they will presumably focus on those properties within their portfolio which are not currently at this level.”

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