EPC Transformations Supported by Leading Property Expert. Prominent property market analyst Doug Shephard, director of the Home website, expressed his surprise at Prime Minister Rishi Sunak’s shift in energy efficiency requirements for landlords. Shephard noted that it marked a change in the right direction, which contrasted with the concerns of some climate advocates who objected to the alterations.
These changes in government policy include scrapping proposals that mandated significant energy efficiency upgrades for properties under Minimum Energy Efficiency Standards for landlords. Instead, the government will encourage households to make such upgrades voluntarily.
Additionally, the Boiler Upgrade Grant will see a 50% increase to £7,500, supporting households in replacing gas boilers with low-carbon alternatives like heat pumps.
The government is extending the deadline for banning oil, LPG boilers, and new coal heating in off-gas-grid homes to 2035, postponing the phase-out from 2026. An exemption is also set for the phase-out of fossil fuel boilers, including gas, in 2035 to accommodate households facing challenges in transitioning to heat pumps or other low-carbon alternatives.
Doug Shephard, a property market analyst, believes that landlords across the country will welcome this decision, particularly for properties that are difficult to insulate. In the latest edition of the Home index, Shephard notes that while nobody wants substandard housing, tenants in the private sector have the freedom to choose the properties they rent or buy. Energy Performance Certificates offer insights into a property’s energy efficiency and cost, allowing savvy tenants to make informed decisions to lower their energy bills.
Tenants opting for rental properties with a ‘F’ grade EPC should anticipate higher heating costs. A rising demand for energy-efficient housing can positively influence the sector if there’s an adequate choice.
Rishi Sunak’s decision not to enforce stringent rules across diverse housing types is commendable, as it prevents landlords from leaving the market. Instead, encouraging targeted investments in the private rental sector, particularly through initiatives like Green Mortgages for Landlords and Build to Rent, can expand the inventory of energy-efficient rental homes. Future policies should continue to promote this direction, potentially alleviating the ongoing shortage of rental properties.
In the October edition of the Home index, which analyzes over 100,000 homes for rent and over 500,000 for sale, it’s reported that landlords have seen considerable improvements in gross yields. This positive trend allows many landlords to manage potential increases in interest rates, while the high cost of renting keeps demand for home purchases robust.
The report highlights the pivotal role of a strong rental market in supporting the sales market. Substantial rent increases over the past five years were a direct result of a sharp decline in the availability of on-market properties for rent. Although the total rental stock is up by around 37% since its low point in September last year, it remains 48% lower than in October 2018. This continuing shortage will likely result in smaller rent increases in the future, further bolstering the sales market.
Home reports that unsold property stock levels saw an increase in September, but they are still within the range observed in the seven years before the COVID-19 pandemic. However, the report suggests that an oversupply scenario is unlikely in the short term due to a combination of low new instructions and the strength of the rental sector.
While rents are continuing to rise, the rate of increase has slowed down, largely due to a 19.7% increase in supply over the past year. The mix-adjusted average annualized rent increase for the UK stands at 9.7%. In the regional context, the North West leads the way with rent inflation at 15.0%.
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