Landlords face financial barriers to EPC upgrades

Landlords are facing financial difficulties in meeting EPC targets, with the typical cost of achieving compliance estimated at around £9,000 per property, according to Barclays.

Barclays’ closing the energy efficiency gap report reveals that, while landlords are taking action to improve EPC ratings, they are facing financial barriers to making the necessary improvements.

The news comes as the government has proposed that all privately rented properties must meet EPC C targets by 2030.

Significant costs for landlords

According to the data, energy efficiency is increasingly influencing renter preferences. Some 25% of renters agree that they are exploring options to move to a more energy-efficient home to lower their monthly bills, while 42% agree that energy costs are a major factor in their decision about where to live.

More than half (51%) of landlords said they have made enhancements to their properties in the past three years to improve their EPC rating.

However, 38% of landlords expect some difficulty complying with the proposed Minimum Energy Efficiency Standards (MEES) changes, with landlords estimating a typical cost of around £9,000 per property to achieve compliance, higher than the £6,100 to £6,800 estimated by the government in its policy projections.

Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “People can see the value of a warmer, more energy-efficient home. However, our research shows that willingness alone will not deliver the scale of change required.

“Larger improvements can involve significant cost, disruption and difficult decisions, while renters may have little control over the fabric of their homes. Clear advice, access to trusted installers and appropriate finance must work alongside stable policy if households, landlords and housebuilders are to move forward with confidence.”

Lack of guidance or information for landlords

According to the report, landlords flag a lack of guidance or information as a barrier, with “clear guidance on how to improve EPC rating” the second most popular option when asked what type of support, information or resources would help them most.

Similarly, when asked what the biggest barriers are to achieving their priorities, the most common barrier cited by landlords was uncertainty around regulations (42%), followed by cost-related barriers, including a lack of incentives (26%) and the required upfront cost or investment (24%).

Barclays is urging the government to provide more support to landlords and offer incentives.

The report says policymakers should address misaligned incentives, as the costs and benefits of energy efficiency improvements are felt by different actors across commercial and residential markets.

It says policymakers should consider how incentives can be better aligned to ensure energy efficiency investments by landlords and businesses are encouraged through tangible benefits.

Barclays says the government should also unlock finance for higher-cost energy efficiency improvements.

Barclays adds the government should consider how reforms to the Consumer Credit Act might support responsible lender participation in green consumer finance, alongside the existing Green Homes Finance Strategic Partnership.