Energy Efficiency and EPC`s – the Final Straw that Broke the Landlord`s Back
Energy Efficiency and EPC`s – the Final Straw that Broke the Landlord`s Back
Over half (52%) of landlords are considering selling properties due to the impending Energy Performance Certificate (EPC) changes that will force them to upgrade their homes, according to a recent Mortgage Works (TMW) Report.
The government plans to increase the minimum EPC requirement to C for all new tenancies by 2025 and for all existing tenancies by 2028. For landlords with several properties having a poor EPC rating, this could be both a costly and awkward problem to solve, particularly with tenants in situ.
The Government have been slow to offer effective help to the PRS and so far the only incentive for landlords has been a £5,000 grant incentive to switch from gas boilers to carbon-free heat pumps. Unfortunately, on its own this barely helps improve the EPC rating under the current way EPCs are calculated. The property also needs to be very well insulated for the heat pumps to work to any efficiency and to enable a constant temperature to be achieved.
Timothy Douglas, policy and campaigns manager at Propertymark, has commented that: “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.
“If the alarming number of landlords who have considered selling up within the report go on to do so, it will have a detrimental effect on not only the UK government’s ambitions to reach Net Zero, but also for the thousands of renters looking to be housed as stock levels deplete. In some parts of the market, this will put additional burdens on local authorities and increase demand for social rented housing as not everyone can afford to buy.
“To support the longevity of the private rented sector, the UK government must introduce realistic and achievable targets that take into account the diversity of the country’s housing stock. Furthermore, without incentives and sustained funding options that landlords can tap into, it is unlikely that the UK government’s proposals for energy efficiency will be met.”
Landlords with larger portfolios are the most likely to sell some or all of their affected properties. A third (33%) of investors are unsure what they’d need to do, to get their homes to a C standard. Most plan to improve their properties by fitting traditional insulation, a quarter (25%) are looking to upgrade the boiler, while a similar proportion (24%) are looking to upgrade existing utilities.
Some mortgage lenders have released green lending products to help landlords make changes to their properties, which is likely why TMW is publicizing green energy issues. The lender has launched a service called Green Further Advance available to landlords with an existing TMW mortgage, offering loans between £2,500 and £15,000 up to a maximum of 75% LTV to pay for upgrade work.
Daniel Clinton, head of lending at TMW, stated that landlords are “therefore understandably concerned about how they will both fund the work, find someone to do it and have it completed in time.”
Joined up thinking needs to become a theme to many of these sensitive subjects, something the Government in it`s apparent piecemeal approach, is choosing to ignore; albeit at its peril if their energy reduction targets are to be met!