Proposed minimum energy efficiency standards regulation in England could leave residential landlords facing a £17.9 billion bill, a lettings agency warns.
The government’s proposal for all rental properties to have a minimum EPC rating of C by 2025 will add pressure to those already faced by landlords and may lead to many exiting the sector., according to Knight Frank.
Whilst some 13 per cent of renters are willing to pay a premium for a low carbon property, the average annual rent in 40 per cent of local authorities wouldn’t cover the average £9,260 spent to bring a property up to EPC C.
While still at consultation stage, the legislation is expected to require rental properties to have an EPC rating of C or above by December 31 2025 for new tenancies and by December 31 2028 for all existing tenancies.
Current regulation, in place since 2020, dictates all tenanted properties be rated EPC E or above, notwithstanding exemptions.
Should the legislation pass, Knight Frank believes this will place a greater urgency on the private rented sector to improve the energy efficiency of stock than the broader ambition to have all homes up to EPC C by 2035.
Of the 4.8 million households in the private rented sector across England, some 60 per cent have a rating of EPC D or below.
Just 2.4 per cent have an EPC rating of F or G, falling below the current legal for a minimum EPC E, which is an indication of the level of exemptions in line with current regulation. These exemptions include listed properties and properties where the cost of even the cheapest recommended improvement exceeds £3,500.
Under the proposed legislation, the cost exemption is likely to rise, with many speculating a cap of £10,000, bringing many more properties into the fray.
Previous Knight Frank research found that the average cost spent to upgrade a dwelling previously rated EPC band D or below to at least a band C is £9,260. Though this varies, properties with an EPC rating in band D, for example, typically spent £5,500 on the necessary improvements to move to band C, with this figure doubling to over £10,000 on average for properties in bands F and G.
By applying these cost estimates to the private rental sector, omitting exemptions and placing a maximum spend of £10,000, Knight Frank calculates the total bill for landlords to upgrade to the minimum requirement of an EPC C is an estimated £17.9 billion.
The greatest expense is expected to be borne by landlords in London, at £3.2 billion. This is driven by the prevalence on private rental households in the capital (a fifth of the total), rather than a reflection of the quality of existing rental stock.
Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions.
If any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals, then the post may be deleted and the individual immediately banned from posting in future.
Please help us by reporting comments you consider to be unduly offensive so we can review and take action if necessary. Thank you.
.jpg)
%20(002).png)
.png)
Join the conversation
Jump to latest comment and add your reply
Did I miss something? Paragraph 2 of this article is surely incorrect as the Department for Energy Security and Net Zero decided to scrap the 2025 deadline. This means all rental properties must have an EPC rating of A-C by 2028.
You are correct. However as per the original timescale, 2028 is still proposed, not yet in law
I wonder how many hundreds of Billions it will cost to get all properties up to the almost impossible EPC 'B' (by 2035) rating....
They leave that number out, as its so incredibly high it would cause a panic stampede.
They will leave it out. 2035 is another politicians problem later. Like dealing with pensions.
Moving the goalposts again , typical
The thing that is very rarely mentioned is that the owners of leasehold flats often don't have the right to install most types of insulation. We can't have cavity or exterior wall insulation if the other leaseholders and freeholders don't want it. We often can't install internal insulation without making the flat too small to fit mortgage criteria or minimum space standards.
We can't insulate the roof if the freeholder doesn't agree. We can only do internal ceiling insulation if the ceilings are high enough.
We can't upgrade the windows without paying hundreds of pounds for a consent licence.
It would be interesting to know how many properties with EPC or below are actually flats where the leaseholder isn't allowed to install insulation.
It would also be interesting to know how many of the registered EPCs are still in any way accurate. I know at least 4 of mine are miles out.
Totally agree, but this government will not even understand , they are thick as mince 😳👎🏻
Government have pledged to reform leasehold in their term, there are 4.2m leasehold properties in England. Labour have stated they’ll abolish it if they regain power. That’s a lot of votes which the cons could lose if they don’t address it. It’s a wait and see what will happen.
Then why don't all us landlords get together and sell off all of our freeholds to each other, and then refuse each other permission to do any works :) Bye Bye EPC problems.
i have 5 year old flats that have double glazing , full insulation , low energy lighting but electric central heating and are d rated - when they were last assessed i was told there was nothing that could be improved apart from removing the central heating and moving to storage radiators. Totally ridiculous as the tenants largely use edf for green energy
Jo,
You have summarised the issues faced by many landlords perfectly. I'm also in the same situation with my leasehold flat where I am UNABLE to carry out any updates. EPC is F but have applied exemption as that is the only way I am still able to keep and rent the property. The EPC rating system is a farce and doesn't allow for or take into account any possible restrictions to updating the property.
Out of date article, we know it will be 2028…… then I sell everything 😂😂💵💵, I am paying nowt !!
As someone said before - not LLs but tenants who will pick up the bill! I'm not buying EPC points unless they are cheap - and lets be honest that is all we are doing.
Selling is cheaper
There will be a lot of properties sitting empty, and at the same time there will be the biggest shortage of available properties we've ever seen. If you think rents are sky high now, wait until this lands.
Government yet again bringing about the conditions that will make life awful for renters. I just wish the renters as a whole would wake up and work out who is actually behind their hardship.
Labour will be in power when all this B S hits the fan, won't they have one hell of a problem then
My feeling is that if Labour do win the next GE, then we as LL’s will suffer even more regulations, costs and pain. Trouble is, there is no alternative. Landlord bodies in my humble opinion, should be doing a lot more to put forward the reality of the situation, rather than letting all the woke lefties put forward an unreal and frankly utopian view of how things should be.
John,
But we only have the limp wristed Ben Beadle. He even had a "welcome" back for Michael Gove. He always has a "welcome" for bad news for landlords.
It may be the Govt's problem but it will be 1000s of ordinary people who suffer & they are the ones who can do nothing about it.
Rental houses and flats that are not already EPC Grade C are energy wasteful and NOT fit-for-purpose. These rental units have no place in our national's private rental sector. Tenants who live in these sub-standard buildings are in terrible fuel poverty. Before the war started 3 million UK families lived in fuel poverty and that number has now risen to 8 million. This is not good for business. I and thousands of other professional landlords have reinvested into our assets over a long period of time and now have portfolios of energy efficient, high-quality houses and flats that tenants can actually afford to heat during the winter. The Government has given landlords masses of notice. EPCs came in 15 years ago. The MEES legislation went on the Statute books 8 years ago. How long do landlords need to insulate the walls and roof of their rental assets and install a modern, efficient heating system?? Commission a draft 'as is' EPC from a decent energy assessor, work with them to produce a draft 'predicted' EPC that gets you to EPC Grade C and then carryout the works. How difficult is that. In my experience that moaners are those amateur landlords who think being a landlord is dead easy 'passive income' and you can get away without re-investing a penny back into the asset that gives you income. No sound business runs like that but a few (vocal) Buy-To-Let landlords think they can keep 100% of the rental income year after year. Business doesn't work like that and they will have their wealth removed from them by legislation, but most importantly by the market.
Grade C and below ARE fit for purpose. They were fit-for-purpose when built; many over 100 years ago and they are even more fitter now. Technology has moved on so clothes are better insulated and thankfully due to global warming or climate change it's warmer than it used to be 100 years ago.
Have no place in the PRS? Well okay I'll take it away. My tenants can come and live with you as they won't find anywhere else. I'll leave you to explain it to them with your holier-than-thou approach.
I am not investing. The government keep flip flopping with their approach. Selling is a distinct possibility with rental reform and Labour probably coming. I won't get my money back.
what about all, the social hosing that is totally unfit - local counciis and social housing providers do not have to comply and my local authority says that cannot afford to comply without government intervention
Your message is copied and paste from Letting Agent Today. EPC standard is useless because the Assessor can pay a couple of hundred pounds to be certified and start selling his service without understanding really the industry. There are inconsistencies in standards and no license for this Assessors. They should be a proper license just like a chartered accountant as it involves huge investment. All housing and commercial need to be assessed to close the gaping holes in the buildings market. There is no point hitting PRS landlords when you buy a flat or a house, very often, the residents have lived there 45 years and done no maintenance at all. So where are the standards? Is this only for PRS landlords? This is nitpicking and discrimination to PRS, this is to have less landlords to stand up and to satisfy the bigger players. This is not a fair game. GOV should target commercial and all residential, period, if EPC C is essential and a must. Leasehold is also prohibitive in red tape to achieve EPC improvement, in walls or roof. Your comment on 6 April, that you are hoping for fewer competitor landlords in the market so you can raise rents and improve yields. This proves your real intention is to hit other landlords that don't have the same financial power as yourself, when you are working in the industry to have the right connections to improve EPC at cost effective manner. You also need to realise many landlords in the PRS have properties as the source of income as their pension and some are retired.
B L - They won't hit homeowners yet. I would be political suicide. Bashing landlords is fine.
Very high and mighty of you to spout this nonsense Martin. I even hate the fact, that I read it.
Nick, you are right about suicide, this says EPC C is not necessary, otherwise, the whole UK should apply.
You're talking utter Sh*t. You're sat on your so called high horse thinking you're superior to all other people on this forum. The fact is the EPC guidelines are so ambiguous, one person can rate a property a D and the other can come in as a C. What are you going to do when they tell you everything has to be a B? instead of acting like a know it all do gooder, why don't you just F*ck off and leave us to do our jobs in peace. Stupid nonce.
I don't think any of us could put it any more eloquently than Vince has done.
Martin , you’re the best case I’ve ever seen for an ignore function on this site
Hi Martin thanks for your input. I have replaced countless boilers and have spoken with tenants afterwards and to my disappointment have been told that their bills ahve hardly fallen. This was before the hike in energy prices. I have had a similar experience in my own home. I admire your confidence in these reports but to be honest you should not allow yourself to be so easily led.
With regard to insulation, you need to ensure that it is the right insulation for your house and that you are not causing issues for the future. One example is foam insulation in the roof. A lot of lenders will not lend if the surveyor cannot see the state of the timbers. On top of this a lot of older houses need to breathe. If they have lime render or cement then this is even more important. Modern house building and insulation does not always work with older buildings.
Another lesson from builders is when they thought it was a good idea to reduce the angle on a pitched roof. All approved by qualified architects. The poor home owners whom have these properties have far more maintenance issues than conventional pitched roof's though modern materials have been of benefit in this area.
Therefore oh wise one I recommend that you wise up and not follow blindly to these recommendations.
Oh bully for you! C and D are just fine. The EPC calculations are simply wrong and inconsistent across the board. I’d rather give the tenant a discount on the rent of the cost of the so called savings per the EPC and let to people who CAN afford to hear and eat.
That means nobody on benefits, no low paid workers, only workers on average pay. It is what it is.
They can make it as difficult as they like for landlords, but they can't stop us selling our properties...... YET!!! That's why I've started my exit sell up. 👍. I'm getting out whilst I still can. Let's be honest... The future doesn't look bright for landlords.
Agree. I started my S21 process immediately after Gove's Brown Paper came out last year. Doing it before eviction bans come in especially with Labour, and potential having to gift my properties to foreigners on benefits.
This is my fear, will Labour put an evictions ban in straight away and stop us selling 😱🆘
Shane I'm doing exactly the same, though going slowly as I hope property prices will pick up later in the year. Currently you will have to drop your value in order to secure a sale.
I wonder if MR Gibbons is employed directly by shelter or is a sub contractor of propaganda services
any way sold most of my UK houses purchased properties in Europe best move ever we are treated the same as every other business no discrimination no hate propaganda provide housing outside the UK it will be the best move you ever made
I was thinking along those lines. Not sure he is a LL. Whereabouts in Europe have you invested?
Pretty sure he’s typing his drivel from a padded cell
Amazed he can while wearing a strait jacket tbh
I don't do arrogance so I don't read his posts
Title should be: "Tenants to be hammered with new EPC costs, warns agency" as this money will have to come out of increased rents.
Nick sorry been in meetings all day Bought properties in Spain initially now doing Portugal all long term tenants but I am going to try a couple of short term lets as well in Spain at first
Would be very interested to know how the short term spanish lets do -thinking of that myself good luck 👍
Gareth. The other problem we have is the stringent HMO Regulation’s that required some very expensive upgrades coupled with a massive licensing Application Fee generally at least £1’500.00 in outer London for a 3 bed Terraced house but this is linked to your EPC and if yours has a poor rating then the fee increases.
Nearly £2000 in Glasgow to get the HMO licence to allow more than 2 unrelated adults to share a 3 bedroom flat, along with around £5000 to fit fire doors, interlinked mains powered smoke alarms then annual PAT tests and nearly £1000 to renew the licence every 3 years.
I know of several big flats now only let to 2 unrelated adults to avoid the cost and bureaucracy of the over the top regulations.
In the 1921 census these same flats were occupied by around 10 to 12 permanent residents. In the sixties there were probably 6 students sharing them, with alcohol poisoning the biggest risk faced by them, not fire or CO poisoning.
No wonder we have such a serious shortage of housing!
Why a family can have unlimited members in one household, but HMO does not permit more than 2 unrelated adults for sharing 1 bathroom and 1 kitchen? Seems like because it is a tenancy, so it gets hit. So HMO license justifies its reason? Money talks.
Most Properties are in great condition when let, after landlords had them vacant and the opportunity to get them ready to let.
However all this goes out the window with Mr Gove’s nonsense as far as he’s concerned you can’t get it vacant, then its the luck of the draw, if you get good Tenants from Eastern Europe it will be kept as good as the day they got it.
On the other hand you can get stuck with Tenants from other parts and Culture’s, see your property ruined in 6 months
flat, mould, dirt, filth and damage all over. Sadly those are the facts, these are the people most likely to be running to Council to complain about the mould etc that they caused.
Please login to comment