A recent report from Rightmove reveals that approximately 2.9 million private rental properties in the UK require significant improvements to achieve an Energy Performance Certificate (EPC) C rating. The total estimated cost for these upgrades is £23.4 billion, which breaks down to around £8,074 per property for individual landlords.
This situation highlights the financial burden many landlords may face as the government continues to push for better energy efficiency standards in the rental sector. The proposed minimum EPC requirement for all rental properties by 2030 has recently been reintroduced, following the scrapping of a similar proposal by the previous administration. This move underscores the government’s commitment to enhancing energy efficiency and reducing carbon emissions across the housing market.
However, Rightmove warns that without adequate financial assistance to support landlords in implementing these necessary upgrades, the new requirements could have unintended consequences. If landlords are unable to afford the improvements, they may choose to exit the rental market altogether, leading to a reduction in the availability of rental properties. This could exacerbate the housing crisis, making it even more difficult for tenants to find affordable accommodation.
The potential for a decrease in rental property availability raises important questions about the future of the rental market. As landlords weigh their options, the government must consider how to provide the necessary support to ensure compliance with new energy standards while maintaining a stable rental market for tenants.
Recent real-time market data from Rightmove shows that the percentage of former rental properties entering the sales market has reached its highest level on record, indicating that more landlords are choosing to sell their properties. In August, 18% of homes for sale were previously rented, a significant increase from just 8% in 2010.
To gather insights for the report, Rightmove conducted a survey involving over 14,000 homeowners and renters, along with more than 1,000 landlords.
The survey revealed that 50% of landlords are worried about potential government charges for failing to meet EPC requirements. In contrast, 19% of renters believe that stricter energy efficiency regulations should be the top priority for the new government.
The Labour government’s Warmer Homes plan aims to invest £6.6 billion in upgrading homes throughout Great Britain. This initiative seeks to enhance the energy efficiency of properties by focusing on improvements such as better insulation and the installation of low-carbon heating systems. These upgrades are intended to create warmer, more comfortable living environments while also reducing energy consumption and associated costs for homeowners.
By incorporating modern solutions like heat pumps, the Warmer Homes plan represents a significant step towards achieving a greener housing sector. This ambitious proposal reflects the government’s commitment to improving the overall quality of housing in the country while addressing climate change. If implemented effectively, the plan could not only benefit individual households but also contribute to national goals for sustainability and energy efficiency.
While any new policies or schemes would need to be carefully thought through, it believes there are complementary activities to be pursued:
- Create a support package for homeowners and landlords with properties valued under £400,000 to facilitate green upgrades. This could be achieved through grants or low-interest, long-term loans.
- Allow landlords to deduct the costs of energy efficiency improvements from their income tax in the year the expenses occur, rather than waiting until capital gains tax is applied when the property is sold.
- Introduce stamp duty rebates for new buyers who make green improvements within the first few years after purchasing a property. We proposed this change last year and believe it could effectively encourage people to implement upgrades.
- Encourage mortgage lenders to keep investing in innovative green mortgage products to increase awareness and broaden their appeal to a larger audience.
The report indicates that a green ‘wealth divide’ is emerging, with owners of higher-value properties making green upgrades at a significantly faster rate than those in the mass market. This disparity raises concerns about equal access to energy-efficient improvements, potentially leaving lower-valued properties at a disadvantage.
An analysis of Energy Performance Certificates (EPCs) issued in the past year revealed that 50% of properties valued at over £1 million had significantly improved their ratings since their last EPC assessment. This reflects a growing trend among wealthier homeowners to invest in energy efficiency and sustainability. In contrast, only 32% of properties valued under £400,000 experienced similar upgrades, highlighting a substantial gap in investment and resources available for those in the mass market.
With 64% of the properties listed for sale on Rightmove priced below £400,000, this trend underscores the urgent need for additional support aimed at helping the mass market make necessary green upgrades. Without intervention, the disparity between property owners could widen, leaving many homeowners unable to meet new energy efficiency standards and benefit from potential savings on energy bills. Addressing this issue is critical for ensuring that all homeowners have the opportunity to enhance their properties’ energy performance and contribute to broader environmental goals.
With the recent rise in the energy price cap, household energy bills are projected to increase by an average of 10% this winter. This makes energy-efficient homes increasingly important as individuals look for ways to reduce living costs.
A survey revealed that 92% of renters believe it is essential to understand the energy efficiency of their homes, while 87% of homeowners share this sentiment. This indicates a growing awareness of the impact that rising energy costs have on rental properties.
Additionally, many people are open to changing their habits to save on energy costs. The majority—72%—of respondents expressed willingness to adjust how and when they use energy in order to access cheaper rates during off-peak hours.
Rightmove highlights the significant difference in energy bills between homes with varying energy efficiency ratings. For instance, the average annual energy bill for a three-bedroom semi-detached house with an EPC rating of F is £4,312. In contrast, the same house with an EPC rating of C has an average bill of £1,681, resulting in a savings of £2,631.
Rightmove’s Greener Homes report is now available on their portal. It provides a regional overview of housing stock by EPC ratings, improvements made since 2019, reductions in annual CO2 emissions, updates on new build developments, the latest innovations in energy efficiency, and the most common green upgrades homeowners have undertaken.
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