Seven in 10 landlords have properties with an EPC rating of D or below 

Seven in 10 landlords have properties with an EPC rating of D or below 

10:13 AM, 4th November 2022, About 3 months ago 15

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The scale of the situation for landlords having to improve their rental properties to meet the energy performance certificate (EPC) standard of C has been laid bare in new research.

According to Shawbrook, seven in 10 (71%) landlords in the UK still own rental properties with an EPC rating of D or below.

Their study also reveals that only a quarter of landlords’ portfolios contain properties that all meet the C target for energy efficiency.

Nearly four-in-ten (38%) only have properties that are rated D or below.

Property118.com has previously revealed that most landlords with properties below a C rating will have to spend thousands of pounds to bring them up to standard.

And readers have highlighted that BTL mortgage lenders are increasingly looking at the EPC rating of a property – though there is no legislation that states that properties must meet this standard by 2025, as many believe.

Currently able to let homes which have an EPC rating of D

While landlords are currently able to let homes which have an EPC rating of D and above, standards are widely expected to become tougher.

The government has previously set out an ‘aspiration’ for a minimum C rating in England and Wales by April 2025.

Future legislation could see landlords unable to take on new tenants or face fines if they fail to comply with the changes.

Landlords estimate that bringing the average property up to a C standard would cost them almost £2,000.

However, there is a concern that with the cost of labour and materials going up, landlords could be underestimating the cost of the work.

79% of landlords with a mortgage have at least one property rated D or below

The research shows that 79% of landlords with a mortgage have at least one property rated D or below, indicating a role for lenders in making efficiency improvements.

Shawbrook is continuing to offer EPC-related discounts as part of its commitment to sustainability in the rental sector.

The findings are part of Shawbrook’s second EPC report which explores the current EPC challenge, including the role of the cost-of-living crisis in driving change.

It also investigates the knowledge gap and the role of government and the wider industry to support landlords in improving efficiency.

‘Efficiency standards will become tougher in the future’

Emma Cox, the managing director of real estate at Shawbrook, said: “It’s likely that efficiency standards will become tougher in the future, which is just one of the reasons that landlords should take note of these proposals and start making a plan.

“Landlords should know that they are not alone in this.

“Lenders, including Shawbrook, are working hard to help drive awareness of regulatory change, support with creative product options, and offer practical support to customers and partners.”

Ms Cox added: “Standard products like bridging finance can also play a role in securing the future of the sector.

“During such a challenging period for the UK in general, we remain committed to bringing together all industry stakeholders to develop the conversation around EPCs, and to make real progress towards our shared goals.”



Comments

Beaver

13:32 PM, 4th November 2022, About 3 months ago

So if that's correct (70% of landlords having properties with D or below) and Shawbrook wants to "....develop the conversation around EPCs" then why would you wish to exclude a property with solid walls (e.g. with lime mortar) or cavity walls that shouldn't be filled from access to funds that would allow them to use renewables; e.g. photovoltaics, ground source heat pump, solar water heating, back boilers fired by wood. If you aren't going to bulldoze the houses and rebuild they need to be heated and lit by something; there is nothing eco-friendly about bulldozing a brick and mortar house or exempting new-build but not refurb from VAT: the CO2 that fired the bricks is already in the atmosphere and the new build takes resources to put up.

Jonathan Cocks

17:40 PM, 4th November 2022, About 3 months ago

I have 2 properties in Cornwall. 1 with very thick (22 inch) solid walls. Property is 100 plus years old. The other is lathe and plaster.
Both have EPC BELOW ‘C’ rating.
Both properties have old eco 7 night storage heaters, which I would like to replace, with infra red electric heating but I understand this form of heating is not recognised by the EPC COMPUTER. No gas in village and no space to fit any heat pump. Solar or wind might help but I doubt will increase score by much.
I would like to plan now how I get the rating to ‘C’ by 2025, but I have no idea where to start to look at what improvements I can make to hit the expected target. The gross profit for each property is about £2000 per annum.
The other question I have is if I find ways to improve the EPC, is this cost and income expense off setable against annual rent or is it a capital expense and off setable against CGT when property sold ?

Beaver

18:50 PM, 4th November 2022, About 3 months ago

Reply to the comment left by Jonathan Cocks at 04/11/2022 - 17:40
And that is a shame isn't it? Cornwall gets 1500 hours of sunshine per year and being a rock stuck out in the atlantic it also gets load of wind. But if you've got solid walls then nobody is going to give you an incentive to use solar or wind are they?

How does that make any sense? The properties are there, nobody is going to bulldoze them and you have to heat them and light them with something.

Do they have chimneys? And could you heat them with a biomass boiler?

Julian

7:57 AM, 5th November 2022, About 3 months ago

Let’s not forget that the EPC ‘surveyor’ can’t get off their backside and inspect properly. All my ‘D’ rated Victorian stock houses have loft insulation but the EPC‘s say ‘assumed none’. So even if it would meet ‘C’ rating the scoring is susceptible to slack work, even when provided with evidence/photos….not admissible because the sector needs to witness the image/insulation!!!
What happens with wall insulation down the line and no one accepts the evidence I have?

Jireh Homes

9:56 AM, 5th November 2022, About 3 months ago

Reply to the comment left by Jonathan Cocks at 04/11/2022 - 17:40
Hi Jonathan - normal recommendation is to upgrade to modern High Heat Retention Storage Heaters, although may not be necessary to change out all of the exiting older style to achieve the lift in SAP Rating. And they may be some gain on immersion heating arrangements (depending on current set-up). Recommend chat to your local Domestic Energy Assessor and get them to model the step changes before expending capital outlay (as there may be other lower cost improvements worth undertaking). As "like for like" improvements charge to Revenue as part of your annual tax return.

Robert McPhee

10:22 AM, 5th November 2022, About 3 months ago

I believe it is time for the industry to question the software used to create EPCs and test its outputs against the real world. Here is another example of a property's rating being changed from C to D (making it probably un-rentable from 2025) even though nothing had changed to justify the rating change.
The property, a 83sqm, 3 bedroom 1950s semi-detached property with modern condesning gas combi boiler, all LED bulbs, filled cavity wall insulation and loft insulation was downgraded by the "new" software from its 2011 C rating to a D rating in 2022.
We can all discuss the "assumptions" made by the software or the assessor, but what they can't do is deny the real world energy use by the property.
This property was fully occupied during a 3 year period of March 2019 to March 2022 (here referred to as "the COVID years", so it would have been using more energy than a normal household). During that time it used 1051 cuft of gas, using an average calorific value this is 33,807 kwh of gas over 3 years. This makes it an average of 11267kwh/yr. If we add 220kwh for LED lighting (which is 20x 5w bulbs on for 6 hours a day every day) and we add a significant 1000kwh for other electricity use related to heating and maintenance of a home (not including fridge, freezer, cooking, kettle, tv, internet and other non heating related phantom loads), we get a total use of 12,487kwh per year usage. So the Primary Energy use per year is 150kWh/sqm. Each EPC calculates a Primary Energy Use Per Year, so we can compare its output to the real world.

So real world for this property per year is 150kwh/sqm.

2011 EPC calculated it as 173kwh/sqm per year.

2022 EPC calculated it as 235kwh/sqm per year.

So the software and assessor assumptions were close in 2011, but the new software and assumptions have added 57% extra energy use when compared with the "old" system.

Everyone should not just accept the EPC but should check its output with the real energy use, and the industry should not just be saying "The Computer Says So", and be questioning the outputs created by the software and the assumptions.

This will all become more relevant as the push for EPCs of C or better are progressed for lettings.

Denise G

10:43 AM, 5th November 2022, About 3 months ago

Reply to the comment left by Jonathan Cocks at 04/11/2022 - 17:40My concern is this: if we start upgrading now (we have one property below C where we have planned for some time to upgrade the electric heating), whenever the government announce the threshold for what landlords need to spend before exceeding a 'reasonable cost' or qualifying for any grant, then whatever we might have spent now (so thousands in the case of the above mentioned property) won't count towards hitting that threshold.

Denise G

10:44 AM, 5th November 2022, About 3 months ago

Reply to the comment left by Jonathan Cocks at 04/11/2022 - 17:40
My concern is this: if we start upgrading now (we have one property below C that we plan to upgrade the electric heating), whenever the government announce the threshold for what landlords need to spend before exceeding a 'reasonable cost' or qualifying for any grant, then whatever we might have spent now (so thousands in the case of the above mentioned property) won't count towards hitting that threshold.

Jonathan Cocks

22:48 PM, 5th November 2022, About 3 months ago

Reply to the comment left by Beaver at 04/11/2022 - 18:50
Only 1 property has a chimney the other property doesn’t and don’t think there is anywhere to construct one even if planning allowed it.
But thank you for idea.

Jonathan Cocks

22:52 PM, 5th November 2022, About 3 months ago

Reply to the comment left by Julian at 05/11/2022 - 07:57
Thanks for comments. As a group of landlords how can we engage with EPC to get educated on how we can improve our properties efficiently?

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