Government EPC proposals already influencing landlord purchases

A trend of landlord investors wanting to get ahead of government’s Energy Performance Certificate (EPC) proposals has led to one in four to consider a property’s energy performance rating, one lender reveals.

The government is proposing that the EPC rating for a rented property should be at least a C has, Paragon Bank has found, led to 15% of landlords opting to buy a C or above rated home, while 10% are looking at D rated properties with a view to upgrading them.

And that’s despite the government not yet revealing when the proposals will become law – though the Housing Secretary Michael Gove highlighted last week that the introduction of rules could be delayed.

Currently, the proposal is for all new tenancies from 2025 to meet a minimum rating of C, and for all tenancies to reach the same from 2028.

‘Any new PRS energy efficiency standards will be delayed’

Paragon’s commercial director, Louisa Sedgwick, said: “Michael Gove’s recent comments mean it’s looking increasingly likely that any new PRS energy efficiency standards will be delayed.

“Nevertheless, it’s encouraging to see landlords are already building on the progress made over the last decade in making privately rented homes more sustainable.

“Most commonly, this has been through buying homes that already meet the new standards proposed by the Government, incentivised by green mortgage products.”

She added: “But, with a significant proportion of landlords already making upgrades to improve the energy efficiency of the properties they already own, or planning to do so in future, we see a need for financial support as well as education on what can be a complex and costly undertaking, something that presents huge opportunities for the sector.”

59% of landlords have already taken some form of action

The research from Paragon Bank goes beyond just acquisition strategies and highlights that 59% of landlords have already taken some form of action in response to the proposed regulations.

The survey found that 19% of landlords have taken the initiative to improve their properties to a C rating or above.

Another 14% are currently engaged in retrofitting their properties with energy-saving measures to meet the C rating and 9% say they have already sold to avoid expensive upgrading.

And 7% are selling up because their homes won’t reach the C rating.

Target properties falling within the A to C EPC bands

When asked about future investing, 61% of landlords say they will target properties falling within the A to C EPC bands, while 18% will buy properties rated D or E and upgrade them.

Interestingly, 2% are even considering investing in the least energy-efficient properties, rated F and G, with a view to revamping and improving their energy efficiency.

The remaining 19% stated that EPC ratings would not have a bearing on their future property purchase decisions.