Landlords could lose up to £9,500 a year if they are unable to make changes to the energy efficiency of their property ahead of the proposed EPC regulation changes and 2025 deadline, according to research from a bank.
Shawbrook Bank says this figure refers to the average amount landlords estimate they would lose in rental income per year if they were unable to let out their property because it failed to meet new mandatory EPC levels.
The bank says that its research shows 30 per cent of landlords have not yet made any energy efficiency updates to their properties, with most claiming that works will start within the coming 14 months.
However 10 per cent of landlords said they won’t be starting any works for three or four years, cutting it close to (or possibly beyond) the proposed 2025 deadline.
Some 42 per cent admitted that their tenants would need to leave the properties during the improvement works, with 38 per cent expecting their properties to be vacant for four weeks at a cost of £5,000 in rental income.
Close to a quarter of landlords said their properties are currently rated D or below for energy efficiency so would face being unable to begin a new tenancy from 2025 unless improvements are made, should the proposed regulations be implemented.
However, 27 per cent of landlords admitted to not knowing the energy efficiency rating of their property. In some cases, landlords said they only knew the current energy efficiency rating for some, not all of their rental properties.
Consequently, a quarter of landlords don’t know if, or what, level of work will be needed for their properties to meet the minimum ‘C’ rating under current proposals.
The research found that, on average, landlords expect the improvements to cost £5,900, but only 31 per cent currently have the necessary funds available to pay for the proposed changes.
Emma Cox, real estate managing director at Shawbrook, comments: “We welcome the proposed legislative changes and the opportunity this will provide landlords and members of the private rented sector to be at the forefront of the UK’s green revolution.
“However, there are many unanswered questions about the deadline and possible incentives to enable improvements to be made, so further clarity and education is needed to support landlords through the changes.
“For landlords that don’t have access to the necessary funds to make improvements, brokers can play a key role in supporting them. There are cost effective funding options available, such as bridging finance, and brokers are well placed to help make landlords aware of these solutions.”
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Everyone wants to lend us money to bleed us dry if people can’t afford it the last thing to take on is more debt, do they not take on board the big loans many have already and if Mortgage free they have spent the last 20 years paying it off. We already have DICR, Gas, Right 2 Rent 86 pages, How 2 Rent, ICO’s, Deposits schemes, mad model Tenancy Agreements etc.
Add licensing Schemes a huge initial cost and on going year on year, £1’500, application fee for 5 years, hard wired smoke and heat detection system and annual Certification plus Emergency lighting and annual Certification, fire doors and special locks a big cost, often extra sinks & cooking facilities required but I don’t know what for you can hardly cross the road without getting knocked down with the thousands of mopeds hauling them their ready meals etc.
Right now just add EPC’s for good measure and for many a big cost especially traditional houses that were good for man for 100 years but no good for today generation they are gone too soft, over weight and many can hardly walk because of their life style, eating habits, lack of physical exercise and Computer screens they call work.
The article doesn’t mention what percentage of landlords will just evict their tenants and sell the property to a buyer who intends to live in it, hence not encumbered by the proposed legislation.
So the government puts landlords in a place where they need to borrow money. Those that add this cost to mortgages will not be able to claim the interest tax relief back as the legitimate business expense it is. To think I’m one of the fools that voted for this lot. I hang my head in shame.
Why the assumptive article when the bill has not been passed yet?
Clearly I understand that a requirement of some sort and deadline, however nobody within our so called government or indeed useless council can offer any guidance or expertise into how we will be able to bing our properties up to speed without spending ridiculous monies?
I wonder what the response will be when these properties all hit the market and evictions begin as landlords begin to cut their losses?
there'll be a mad panic as 100s of thousands of Landlords all try to get energy efficiency improvements done in a short period of time. Prices will go through the roof even assuming you can get an appropriate contractor.
I am in the 10% who has done nothing! And it will stay that way right up until the eviction of my tenants and the subsequent sale of my properties.
I know the ratings of all 3 of my properties
. Of course as good landords we want our tenants to live in decent well maintained and safe properties but where is all this going to end?
One property is rated E so will need upgrading so I intend getting it assessed and improved as soon as I can. However, I have to recoup the £20,000 'lost' due to the government's gift of rent holidays during the pandemic. The Tenancy Hardship Grant was too difficult/too many hoops to jump through/too short a time in which to claim for my tenants to claim,. Yet again, more legislation not thought through and at a huge cost mentally and financially to landlords, the majority of which who are good and decent.
For many of us the proposed upgrades will never pay for themselves, even at today's energy prices. Add in the government's British Energy Security Strategy which looks to bring forward renewable / non-carbon energy sources by decades, and the whole scheme is wasteful and will cause huge disruption. The idea of extending the scheme to the whole of the UK's housing stock is a non-starter. Landlords, as the guinea pigs in a failed experiment will end up with marginally more efficient homes, and huge bills which will need to be recouped. Tenants will face evictions and a severe tightening of supply = higher rents. Hold on tight.
The abolition of S21 will complicate getting vacant possession - it could be a nightmare for landlords who have to upgrade their houses..
Is this a minority ruining for the majority situation again, there are landlords that let their tenants live in damp squalor but they are the minority the majority of landlords have decent properties that are well maintained and if work needs doing they sort it out. Why penalise all landlords for the sake of a few causing distress to tenants as they are evicted due to the property needing to be vacant for the works to be done. This has not been thought through well enough and is going to cause major issues to tenants alongside the landlords.
Until we know what rumoured upcoming changes to the EPC algorithm will do to the EPC score we can't really do anything.
Until the government have announced exactly what the requirement will be again we can't really do anything.
By the time the government have made a decision there is unlikely to be sufficient tradespeople or materials to do the work in the unrealistic timeframe they will give us anyway.
It's not law yet, until it is I'm doing nothing, when and if it becomes law I will judge the situation, as properties become vacant after 2025 I will have the choice, spend the money and market them at an increased rent or sell them, if any are still tenanted by 2028 then those tenants will be evicted and the empty properties will either be up graded and marketed at an increased rent or will be sold off one per year, to be honest it doesn't much matter to me which way I chose to go
That’s exactly my approach.
I’m about to S21 a dreadful tenant who can’t afford to pay more rent that her 2019 rate but demands all sorts of upgrades. As well as causing mould, council intervention and no win no fee solicitor letters to boot.
Happy to get rid. Get someone else in before S21 goes and try and keep until 2028. At the moment….
Bit fed up with all the landlord bashing by the govt, tenants groups and Ben Beadle!
Nick, please make sure all the local agents are aware of this dreadful tenant. Make them the council's problem ...
Until the Govt publish the bill we don't know what to do or by when. Until the EPC algorithm is updated we don't know how.
We need clarity before spending money or selling properties but this Govt is hoping we will just go ahead and sort it all out on our own.
Perhaps the policy was devised during a Downing Street party?
Maybe the best plan is to train to do the EPCs and then give false readings so all the properties pass !
I'll pass all yours if you do the same for me, now there's a plan
We wouldn't even need to give false readings in a lot of cases. We'd just need to make sure we input what we know exists.
How many of us have poor EPC ratings because assessors have failed to spot the cavity wall insulation or assume no roof insulation when we have photos proving 120mm of Celotex or have put the wrong model of night storage heater, etc?
It would also give us access to how many points each improvement would give us instead of being told to evict our tenants so we can replace the floor or rip out kitchens and bathrooms to do internal insulation. Those 2 recommendations should be an absolute last resort not the first 2 recommendations listed.
Reply to Jo Westlake comment re; “assessors have failed to spot the cavity wall insulation or assume no roof insulation when we have photos proving 120mm of Celotex or have put the wrong model of night storage heater, etc?“
A decent assessor would have checked attic for his/ herself as part of a thorough assessment of the property. Assessor’s should be gathering photo evidence of the whole property to then submit alongside their report & findings.
It seems we may be dealing with ‘Rogue EPC Assessors’ who are cutting corners to get assessments done quicker so to make more money per day…
Reply to EverythingPRS. You're right if it's a pitched roof with a loft hatch. It's flat roofs or roofs with a shallow pitch and no loft hatch where the problem really arises. A flat roof normally used to be insulated as a cold roof whereby the original deck was taken off and insulation put between the joists. Then the deck and new roof felt put back on. It's impossible to see the insulation after the job is done. Nowadays flat roofs tend to be done as warm roofs where the original deck remains in situ and Celotex is put on top, then a new deck and roofing material. It looks much thicker than a cold roof construction but again the actual insulation is hidden. Even with a Building Control certificate saying it complies with the standards in the year it was done and photos of it being installed and receipts for the insulation assessors still won't acknowledge it exists.
I suppose when we do know its too late and a mad scramble to comply with EPC’s.
I also think the fee structure for M,HMO applications is very unfair for small HMO’s.
West L’don 2 habitable rooms, (living room can counts as habitable if you got one) £1’300. + £100 = £1’400. = £700. per room.
Large HMO’s say 10 rooms £1’300. + £50. per room = £1’800. divided by 10 = £180. per room.
Landlords are expected to spend £5900 on average on this waste of time and money.
Has anyone warned the tenants so they can start planning how they're going to pay this - or is it all coming from huge savings in energy bills?
I doubt there will be any savings on energy bills, just increased rent to cover the landlords costs
Andrew
It's not in doubt. There's no way these "improvements" will be cost effective, even with the huge hike in energy costs which the price cap and other external effects have brought upon us.
Tenants: Be afraid of rent controls. Be very afraid!
I have been a private tenant in my farmhouse now for 22 years. I have a 10 year old disabled daughter who is quadriplegic and wheelchair bound. My home is EPC D, so my landlord will need to update within the new guidelines. He had told me that I may need to move out temporarily while work is being done. My problem is that during my years here I have spent thousands on adaptations. I had a wet room installed, a ramp to the front of the house and new wider front door fitters. My daughter's specialist equipment is all here that includes a hospital bed, stair climber and movable hoists. How can I move out? Where could we go that would be able to accommodate my daughter's physical problems? My landlord is very understanding and had said that he will do all he can to keep us in the home but until the government make things clearer he is not sure exactly what work he will need to do to my home. This is all extremely worrying.
That's a very good example of why we need clarity and why we need it now. The government need to understand people care far more about keeping their home than what its often wrong EPC rating is.
If they decide properties have to be EPC C or above they need to explain what assistance they will provide for people who are made homeless through no fault of their own. Your landlord has been happy to provide you with a very long term home where you have felt secure enough to spend large amounts of your own money to customise it for your families needs. The fact the government think it's acceptable to put you through potentially years of worry and stress is abhorrent.
As landlords we need to know what target we are going to have to work towards, in what timeframe and we need a list of how many points each improvement would make as a standalone job so we can make an informed decision about how to proceed.
You don't need the stress and worry of what might happen in 2028. You certainly don't need the threat of having to move out so solid floor or internal wall insulation can be installed. Loft insulation, better heating controls and solar panels are far more tenant friendly improvements with virtually no disruption to daily life while being installed but for some inexplicable reason either aren't listed as recommendations or are at the very bottom of the list.
I think in your situation you may be able to refuse permission for your LL to do the work and he can get an exemption. Not an ideal situation though :(
Tricia
Not sure why that's not an ideal solution to everyone except Green zealots?
I may be wrong but I thought that LLs are legally required to make reasonable alterations, at their own expense (not the renter's), to accommodate people with disabilities.
Jo. Well I suppose if its a pitch roof the Apex roof is going to be obvious from outside loft hatch or not. Yes most flat roofs were cold deck with the insulation between roof joints below deck but had to have air flow ventilation so not as efficient as warm deck.
Warm deck had the insulation above the roof deck generally and no ventilation required, it should be easy to establish by the extra thickness of the roof make up. However you can have a warm deck without putting the insulated on top if you use purple deck type roof sheets for flat roof, which is the 100mm / 125mm celotek foam
type insulation which has 6mm ply sheet pre-bonded to it, in this case it can go straight on top the roof joints and put the roof felt or whatever on top.
I had a house also with solid wall that I had completely done up that had a “C” because I had lined all internal with Insulated Plaster Board and skimmed, That was 10 years ago this time I got a “D” because I wasn’t there and the Tenant showed him around. I did ring him to no avail he said he knows them type of house are not cavity wall, there you go when it has been issued I don’t know if they can change it easily as it will be gone on website to authorities etc.
In a recent NRLA webinar on EPC ratings, it was suggested that, in the future, it may become illegal to sell a property with an EPC less than C.
There would be a very large number of properties sitting empty rotting while tents on the high street would be increasing
I am not clear exactly what improvements are appropriate to my properties. They are terraces which I am informed are designed to breathe. I've always used lime plaster because if this. To the best of my knowledge the proposed cladding solutions work against the design and cause condensation problems. Until I'm sure I'm not replacing one issue with another I won't do anything and if any tenants hand in their notice I may sell.
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