An authoritative new report from Rightmove suggests that2.9m private rental properties need to be improved to reach an EPC C rating, at a cost of £23.4 billion – around £8,074 per property for a landlord.
The government’s proposed minimum EPC requirement for all rental properties by 2030 is now back on the table after a similar proposal was scrapped by the previous government.
But the property website warns that without financial help to accelerate the upgrades, the move could reduce the availability of rental properties in the market if some landlords choose to sell up rather than make the changes.
The latest real-time market data from Rightmove reveals that the proportion of former rental properties moving into the sales market is already at its highest point on record, suggesting more landlords are selling up. 18% of properties for sale in August were previously on the rental market, compared with 8% in 2010.
Rightmove also surveyed over 14,000 home-owners and renters, along with over 1,000 landlords for the report.
The survey found that while half (50%) of landlords are concerned that the government will introduce costly charges for not meeting EPC requirements, one in five (19%) renters think stricter energy efficiency regulations should be the top priority for the new government.
The website saysthe Labour government’s Warmer Homes plan proposes to invest £6.6 billion to upgrade homes with better insulation and low-carbon heating like heat pumps, an encouraging ambition to improve Great Britain’s homes.
While any new policies or schemes would need to be carefully thought through, it believes there are complementary activities to be pursued:
- Design a package of support for home-owners and landlords across the mass market (properties under £400,000) to make green upgrades, through grants or low-interest, long-term loans;
- Allow landlords to offset the costs of energy efficiency improvements against income tax in the year the costs are incurred rather than against capital gains tax when the property is sold;
- Introduce stamp duty rebates if a new buyer makes green improvements in the first few years of purchase. We suggested this change last year and still think it could be successful in helping motivate people to make changes;
- Encourage mortgage lenders to continue investing in innovation in the green mortgages space, so that new products and awareness of them generates wider mass appeal.
The report also suggests that a green ’wealth divide’ is appearing. It says higher value property owners are making green upgrades at a much faster pace than those in the mass market.
Analysis of EPCs that were created over the past year found that 50% of £1m-plus properties had significantly improved their rating since their previous EPC. This compares with only 32% of properties worth under £400,000.
With 64% of properties listed for sale on Rightmove priced below £400,000, the trend shows that the mass market needs more help to make green upgrades.
With the recent energy price cap rise, household bills are expected to increase by 10% on average this winter, making energy-efficient homes ever more crucial as people strive to cut living costs.
Some 92% of renters say it is crucial to understand the energy efficiency of their home, compared to 87% of homeowners, showing the growing importance of increasing costs and energy bills in rental properties.
There is also a willingness from people to change their behaviour. The majority (72%) of people would be willing to change how and when they use energy if it meant they could access cheaper energy rates at different times of the day.
Rightmove says the difference in bills between homes with higher and lower energy efficiency ratings can be significant. The average energy bill for a three-bedroom semi-detached house with an EPC rating of F stands at £4,312 per year, compared with £1,681 for the same house with an EPC rating of C – a difference of £2,631.
Rightmove’s Greener Homes report is available now via the portal and includes a regional view of stock by EPC ratings and the improvements versus 2019;
improvements since 2019 of the annual CO2 emissions that homes produce; new build development progress and the latest innovations; and the most common green improvements that homeowners have made.