EPC upgrade bill will see two-thirds of landlords selling up

EPC upgrade bill will see two-thirds of landlords selling up

10:56 AM, 19th April 2023, About 11 months ago 2

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The cost for landlords to upgrade their rental properties to meet a minimum EPC rating of C by an expected deadline of 2028 will see two-thirds (59%) sell up and leave the sector.

That’s according to the Mortgage Advice Bureau which says that more clarity regarding the help that is available to landlords is needed.

They also found that the potential upgrade bill will be passed onto tenants, with a third (30%) of landlords saying they would do this.

Another 30% said they had already passed on bills for other upgrades to tenants.

‘Need for more efficient housing is obvious’

The firm’s deputy chief executive, Ben Thompson, said: “The need for more efficient housing is obvious and has had a lot of focus placed on it in recent months.

“For renters, it means potentially lower utility bills, and for the UK’s climate goals, our leaky housing stock is a big barrier to getting to net-zero.

“However, for landlords, the proposed changes to upgrade to at least a C instead of the current E will mean they face having to foot large retrofitting bills.”

He added: “Our research shows just how confused and worried they are by this.

“Even if (as rumoured recently) the government delay the proposed deadline to 2028 for all rental properties, it isn’t long to find the money needed for the upgrades.”

Landlords are hoping that more help will become available

With many landlords facing a hefty bill and a race against time, a fifth (21%) of landlords are hoping that more help will become available to combat the cost of energy performance upgrades.

Currently, landlords must have a minimum energy efficiency rating of an E to be able to let a property out, with exemptions for those properties which would cost more than £3,500 to retrofit to this level.

It is expected that the government will announce a similar exemption for the new enhanced level, but with the additional cost involved to go from an EPC of E to C.

However, this exemption is due to be set at £10,000, with the average home expected to cost £4,700 to retrofit to meet this.

Many landlords concerned and anxious

It is this bill that is leaving many landlords concerned and anxious about how they will afford these changes.

According to the research, a quarter (25%) said it was likely they wouldn’t be able to afford the changes, while a third (34%) said it was quite likely they would sell their property instead of upgrading it.

The newly announced ‘Great British Insulation Scheme’ (formally ECO+) could help improve the performance of the least energy efficient homes.

However, there has been little in the way of policies, announcements, or clarity for landlords, leaving them confused about what upgrades will help.


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Comments

northern landlord

15:08 PM, 19th April 2023, About 11 months ago

With a rented property the tenant as the landlord’s source of income ultimately pays for everything. The renters will find that their (note) ”potentially” lower utility bills on their “leaky” houses will be more than offset by the increased rent charged to pay for EPC upgrades. Figures for upgrading vary a lot but much of the PRS is older stock terraced houses on lower rents that will cost the most to upgrade so tenants could be looking at rent increases of around £200 a month (probably adding more than 30% to their rent bill) if a landlord has to borrow £10,000 and pay it back over 5 years at 6% all to save themselves a few hundred pounds on utility bills. If they can’t pay the extra rent they will be homeless if the landlord can’t afford or doesn’t want to afford the upgrade (as it has no advantage for them) they will also be homeless as the landlord will sell up. I would think that given the choice most tenants would opt to leave the EPC rating and rent where it was. Owner occupiers are not rushing out in droves to upgrade as they know the upgrade costs can’t be justified in energy savings and most people don’t have £10,000 in cash burning a hole in their pockets. In my opinion if the minimum EPC rating for renting must be raised, it should go from E to D, this would make more sense and would come at a lower cost. At the same time all new builds should have an A/B rating imposed to offset the lower ratings of older properties and pull the average up.

Mick Roberts

10:16 AM, 22nd April 2023, About 11 months ago

Reply to the comment left by northern landlord at 19/04/2023 - 15:08
Well said northern, my take on this echoes your words:

There clearly needs to be more advice, guidance, and help for tenants. Cause they will end up paying for this. 60% of Landlords don't increase rents to current market rents. We will have to now if this comes in. So my tenants paying £500pm for £850pm house who have lived there 20 years, I'm going to have to say Sorry you now got to pay £850pm like all new tenants, an extra £4200 per year for u as the Govt said u want & need nearly New Build standards. And if the Govt want even more, then you may be looking at £1000pm. Even though the Govt are paying £500pm less than this with the LHA Benefits for your home.

I'll keep repeating this, as applies to many attacks on us lately.

It's still not happening.

They/we not gonna' be able to retrofit these 1920 houses while tenant is living there & on the cheap rents a lot of tenants are paying.

Govt has to stop penalising tenants AFTER they’ve moved into their home.

Who’s paying for this then?
Cause if tenants are paying cheap rent ie. Landlord looking after em, & then maybe £5000 or £30,000 to upgrade from E to a C, Landlord then says I can no longer look after u with cheap rent. Cheap rent doesn’t pay for these outgoings, I’ve now got to charge u what the Landlord is charging his better off tenants up the road who’s paying more to live in that New build.

I’ve got to start telling tenants soon You can’t live here past 2028 anyway, Govt say u can’t if EPC not a C. And your rent doesn’t pay for a C.

Has anyone asked the tenants what they want? We know they want the better house, but when u give them choice I can give u New build for £1000pm or EPC C for £900pm, or still decent house EPC D but not New build standards for £700pm or £550pm I know what all my tenants say.

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