October 16, 2024 2:53 pm

Insert Lead Generation
Nikka Sulton

According to research from Shawbrook, nearly one-third of landlords are looking for government support to meet the new Energy Performance Certificate (EPC) targets introduced by the Labour government. The findings highlight the struggles landlords face in adapting to the regulatory changes that aim to improve energy efficiency across rental properties.

Specifically, 29% of landlords reported that they believe achieving these new EPC standards would be impossible without government assistance. This sentiment stems primarily from concerns over the costs associated with the required improvements. In fact, 16% of respondents expressed that they would find it financially challenging to manage the expenses related to these upgrades. This financial strain has led to further concerns, with 25% of landlords indicating that they may consider selling properties that do not meet the new standards, rather than invest in costly renovations.

On the other hand, it’s worth noting that some landlords have proactively started making investments in their properties before the regulations take effect. This suggests a willingness among certain landlords to comply with the new requirements and enhance the energy efficiency of their properties, even as many others express uncertainty about the financial implications. Overall, the research underscores the need for a balanced approach to implementing these new EPC targets, with many landlords hoping for a collaborative effort between the government and the property sector to ease the transition.

More than a fifth (21%) of landlords have made significant modifications to their properties in an effort to achieve an Energy Performance Certificate (EPC) rating of C before the previous government abandoned the targets last year. This proactive approach reflects a growing awareness of the importance of energy efficiency in the rental market. Additionally, 22% of landlords reported that they have successfully upgraded their properties to achieve a C rating or higher, demonstrating a commitment to improving energy performance.

Interestingly, professional portfolio landlords, particularly those who own four or more properties, were more likely to have made these upgrades compared to their smaller counterparts. Approximately a quarter of landlords with larger portfolios had implemented changes before the targets were scrapped, whereas only 17% of landlords with one to three properties took similar actions. This disparity suggests that those with more extensive holdings may have greater resources or incentives to invest in energy efficiency improvements.

Previous research conducted by Shawbrook indicated that the majority of landlords were already on the path to enhance their properties before the government shifted its policy. This underscores a broader trend within the property market, where many landlords recognise the long-term benefits of improving energy efficiency, not just for compliance with regulations but also for attracting tenants and increasing property value. The findings highlight the need for continued support and resources from the government to help landlords meet energy performance standards, especially as the industry shifts towards greater sustainability and environmental responsibility.

More than half (54%) of landlords made efficiency improvements in the first half of 2022, driven by increasing demand from tenants due to rising energy costs. However, the uncertainty surrounding the 2030 energy performance target, which was eventually scrapped by the previous government, led some landlords to pause or delay their investment plans. As a result, many still need to take further steps to achieve a C rating for their properties.

The new EPC regulations have raised significant concerns among landlords, with over three-quarters (78%) expressing worry and a quarter of them feeling very concerned about the implications. 

Emma Cox, managing director of Real Estate at Shawbrook, stated, “Our experience shows that landlords are generally motivated to improve their properties. In 2022, many took action in response to tenant demand and the government’s targets. However, when those targets became uncertain, especially during challenging economic conditions, many opted to hold off on expensive renovation projects. With the targets now reinstated, landlords must work to catch up.”

“It’s positive to see clearer guidelines from the government, which will enable landlords to plan effectively as they work towards the 2030 targets. However, with just over five years remaining to comply, it’s evident that landlords will require support from both the government and the industry to meet these standards. Given that much of the UK housing stock was built before 1950, the scale of the challenge becomes apparent. According to the English Housing Survey, 12% of the private rented sector currently falls within the E to G rating range. 

Additionally, while the costs of improvements are similar across the country, the impact is more significant for landlords with lower-value properties. For instance, a £10,000 investment can be considerably more challenging for landlords in the North compared to those in London. 

Maintaining a quality, energy-efficient private rented sector is essential, especially at a time when home ownership and access to affordable housing are increasingly difficult. Achieving this will require collaboration and support from both the government and industry stakeholders.”

 

 

 

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