Landlords are increasingly looking to lenders for fund costly energy efficiency upgrades.

The latest Landlord Trends research from Pegasus Insight says landlords estimate it will cost an average of £11,713 per property to bring rental homes up to the proposed EPC C standard.

With 60% of landlords owning at least one property rated below EPC C, the scale of the potential investment requirement is significant.

Nearly two thirds (62%) of those affected say they intend to carry out the necessary improvements, up 13% on the previous quarter.

While more than two thirds of landlords expect to use savings to cover at least some of the costs, many are already exploring alternative funding options. 

Almost one in four hope to access government grants or support schemes, while others expect to rely on additional borrowing, further advances or equity release from existing properties.

The findings point to a potentially significant financing requirement across the Private Rented Sector (PRS) as landlords seek practical ways to fund energy efficiency improvements while maintaining the viability of their investments.

Separate Tenant Trends research from Pegasus Insight found that 44% of renters consider EPC ratings an important factor when choosing a property.

The research highlights a clear opportunity for lenders to support landlords through the transition.

When asked what would make EPC improvements more achievable, landlords identified a range of financial solutions including further advances, dedicated green finance products, preferential rates for energy-efficient properties and simpler access to funding for retrofit projects.

Pegasus says the findings suggest that access to suitable finance could play a critical role in determining whether landlords proceed with upgrades, increase rents to recover costs or choose to exit the sector altogether.

A spokesperson says:”Most landlords are willing to invest, but the costs involved are substantial. Our research found that landlords believe energy efficiency improvements become financially unviable at around £9,000 per property, yet they estimate the cost of achieving EPC C will average almost £12,000. That leaves a significant funding gap.”