Energy-inefficient homes a turn-off for renters

Energy-inefficient homes a turn-off for renters

8:57 AM, 5th January 2023, About A year ago 11

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More than half of renters say they would avoid an energy-inefficient property if it had an EPC rating of D or below, a survey reveals.

The findings from Shawbrook Bank show that 58% of private tenants would not rent an energy-inefficient home and there is a ‘significant knowledge gap’ about what EPC ratings are and energy efficiency.

Researchers found that young private renters are particularly engaged on energy efficiency, with 72% of those aged 18-34 saying they always check the EPC rating of a property before making any decisions. This is compared to 52% of those aged over 55 years old.

‘Energy efficiency rating of our homes’

Emma Cox, Shawbrook’s managing director of real estate, said: “With an unprecedented energy crisis, the energy efficiency rating of our homes has become increasingly important.

“However, the research also indicates that we, as an industry still have much to do in terms of educating those in the rental market on this issue.”

She added: “Interestingly young renters are paying closer attention to the energy efficiency of their properties.

“While we don’t know whether this is driven more by cost or an interest in sustainability, landlords should assume that it’s only going to increase in importance for tenants.”

Make all rental homes have an EPC rating of ‘C’

But landlords, it appears aren’t waiting for legislation changes to make all rental homes have an EPC rating of ‘C’ as Emma explains: “Landlords are already making changes to their properties to support their tenants and bring their properties up to the standard that is likely to soon be expected.

“However, this can be a costly exercise, particularly with the increasing costs of materials and labour.

The research is part of the bank’s ‘Confronting the EPC Challenge’ report, and it highlights a significant knowledge gap surrounding energy efficiency ratings.

Just 7% of respondents felt they ‘know a lot’ about EPC requirements, while a quarter (27%) of tenants say they have heard of EPC requirements but ‘don’t know anything about them’.

A further quarter (27%) had never heard of them, with half (56%) of renters admitting to not knowing the rating of their current property.

Previous research from Shawbrook showed that the energy crisis had prompted more landlords to make improvements to their properties with 26% having made energy efficiency upgrades to help reduce energy bills for their tenants.

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11:57 AM, 5th January 2023, About A year ago

'...landlords, it appears aren’t waiting for legislation changes to make all rental homes have an EPC rating of ‘C’'. I'm not convinced. I believe most landlords are waiting to see if and when it will become mandatory, and the indications are it has been pushed into the long grass.

With a massive rental shortfall, and huge demand for every rental property, I wouldn't be demanding EPC C if I was a renter right now.

Reluctant Landlord

12:33 PM, 5th January 2023, About A year ago

even making a property a C does not mean that it wont be free to run! Tenants seem to have a false understanding that the running costs will be next to zero - they wont.
High energy prices are here to stay (even if they apparently predictably dip this /next year - they wont be going back to pre covid/war levels)

At the end of the day if all LL have to carry out work then rents will rise as a result and they will have this to contend with as well as high energy costs too.

My basic example... I charge £725 for a 3 bedder (where current market rate is £825 min). If I (worse case scenario) spend up to the max £10k cap and (hopefully achieving a C at the end - no guarantee!) then I have ticked the box required by the government although an exemption may still be required.

If I were to very simplistically divided the amount spend over the 7 years (payback formulae) that's £1428 per year or £119 pcm.

Even if I could agree to freeze the rent at the amount of £844 pcm for even just the first 2 years my tenants would not be able to afford this. If I raised it to market rent and then added on the extra £119 then the monthly rent would top £944.

It may be a good idea to aim for C ratings, but the reality is a totally floored plan which is only going to backfire on the people who the government are apparently trying to help - all those downtrodden tenants housed by all these rogue private LL's by all accounts!

northern landlord

13:00 PM, 5th January 2023, About A year ago

I thought there was supposed to be a desperate shortage of property to rent what with buying being unaffordable and landlords throwing in the towel. Sure, in a hypothetical ideal world if a prospective tenant is offered two identical properties at the same rent and location but one has D rating and the other a C rating they would choose the C rated property but this situation is very unlikely to happen. In the real world a tenant’s priority is to get a reasonable roof over their heads at a price they can afford

Ian Narbeth

13:15 PM, 5th January 2023, About A year ago

"The findings from Shawbrook Bank show that 58% of private tenants would not rent an energy-inefficient home." Easy to say in answer to a survey. I suspect many currently are renting energy "inefficient" homes and will continue to do so. If the alternative is no home, then principles may be flexible.

The looming problem is that because of the EPC rules, it is almost certain that some rental properties that are currently let will cease to be. Either exemptions will not be granted or landlords, fearing that they will not be, or not being able to afford the cost of works will stop letting their properties out. The legislation is unlikely to add a single property to the market so there will be a net loss of rental properties. This is likely to result in a substantial increase in rents across the board. Tenants may find that the saving between heating a Band D and a Band C property is vastly outweighed by the increase in rent.

Freda Blogs

13:35 PM, 5th January 2023, About A year ago

Reply to the comment left by Ian Narbeth at 05/01/2023 - 13:15
Those higher rents will be payable for 12 months of the year, whereas higher utility bills will be payable for only 5-6 months, so which is the better option?

In practice, unless a 2 tier market were to emerge - for properties with EPC C and above and EPC D and below, rents will be will be homogenous across the market just as they are now, so likely everyone gets to pay the higher rent irrespective of EPC.

Another government shoot in foot?

Reluctant Landlord

13:45 PM, 5th January 2023, About A year ago

Reply to the comment left by Ian Narbeth at 05/01/2023 - 13:15
imagine the impact of many landlords giving notice all in a relatively short period of time when on reflection it is going to be too costly for them to carry out such works.

If S21 still around there will be a raft of evictions and if its gone by then the courts will be backlogged with S8 claims all probably citing selling as the justifiable reason.

Be interested to know if the government will be insisting on prosecuting and fining a LL who still has a tenant in situ and who can't remove by the time this legislation is enacted by default of the delay in possession proceedings due to claim backlogs??

Reluctant Landlord

9:14 AM, 6th January 2023, About A year ago

Reply to the comment left by Ian Narbeth at 05/01/2023 - 13:15exactly. The reality is that 'cost savings' (lets face it that is the only thing the tenants are going to be concerned with at the end of the day) are only going to be incurred if the tenant ultimately reduces consumption.
Some LL's will arguably taken the cost route first - to see how little they can spend to achieve the C rating.
If for example they change a boiler to be more efficient add a bit more loft insulation and change a few lightbulbs just to tick the C rating then is that really going to make that much difference to the tenant bills?
If they continued to use the same volume of energy they did before then I believe it would be negligible. and of course the LL can't control that.
If they reduced consumption then yes of course the bills would probably be lower, but that in turn is based on the unit cost of which it seems noone has control of.
We could be in a situation where the LL makes changes to hit the C, the tenant even if they reduce consumption still get hit by high energy unit costs (plus standing charge) which overall make bugger all/any savings for the tenant.
Meanwhile the LL has a bill for the property updates which were enforced on him to allow him to legally rent his own property to the tenant, so he has no choice than to add this to the rent.
Result? Tenant gets a higher rent bill and no real quantifiable cost savings on their energy bills, even though they will have probably reduced their volume consumption by default of using less as a direct result of the higher unit charges in the first place.
Utter madness.


11:08 AM, 6th January 2023, About A year ago

I've just read 700,000 homes don't even have central heating. The vast majority will be old rental properties.

The cost to bring these homes up to EPC C will be massive, and in many cases, tenants would have to vacate to facilitate ease and speed of installation.

This isn't going to happen! Landlords are already selling up in droves.

Reluctant Landlord

12:40 PM, 6th January 2023, About A year ago

Reply to the comment left by NewYorkie at 06/01/2023 - 11:08
is a LL obliged to move people out? I grant you works can be disruptive if this is the route chosen but is this down to the LL to fund too?


13:48 PM, 6th January 2023, About A year ago

Reply to the comment left by DSR at 06/01/2023 - 12:40
The LL isn't obliged to move them out, but cutting gas/electric/water supply, ripping up carpets and floorboards, knocking holes through walls, taking out windows, etc... would be disruptive, especially if there are young children.

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