11:39 AM, 10th February 2023, About A year ago 7
More than two-thirds of landlords say they would be less likely to purchase a property if it has an Energy Performance Certificate (EPC) rating of below C, according to new research.
The findings, carried out by Foundation Home loans, also revealed that landlords were more likely to sell a property rated D-E over the next 12 months.
The lender says that 59% of landlords would be looking to buy a property rated C or above, while only 29% said they would be buying those rated D through to E.
Though the plans have not been made into law, ministers have previously indicated that by April 2025, newly rented properties in England and Wales will need to meet a minimum EPC standard of C – tougher than the current E standard. The regulation might also apply to existing tenancies from 2028.
While 66% of landlords said they were aware and understood of the plans, 25% said they did not understand the details, and 9% were not aware at all.
Two-thirds of landlords said they would carry out any works required to increase the EPC level of a property, however 20% said they would not carry out any works and seek to sell or not re-let.
The findings revealed that 40% of properties did not currently reach a rating of C. This means that the average landlord currently has 2.9 properties rated D and below, with the figure rising to 9.8 for landlords with larger portfolios – over 11 properties.
When asked how they would fund the upgrades, 62% said they would use savings, 30% said they would put up the rent to cover the cost and 19% would seek a Government grant or funding.
The anticipated cost for upgrading each property could reach around 9k, according to the research.
George Gee, managing director (commercial), at Foundation Home Loans, said: “There are clearly very strong levels of awareness here and landlords appear to be actively considering their plans in light of what is likely to hit the statute books.
“The majority of landlords appear to be relying on savings in order to upgrade any properties below level C, however when they get to this point, that might not be achievable or indeed appealing, and mortgage advisers are likely to have to play a considerable role in helping their clients fund such work.”
Mr Gee added: “Previously, the EPC rating of a property made very little difference to its sale-ability or indeed the way landlords viewed it for purchase.
“The EPC level is now a real factor when landlords are looking at purchase opportunities, with over two-thirds saying they wouldn’t purchase a property unless it had achieved the necessary level. That is a real shift, and one that is likely to filter into values if these higher-rated properties become, as is likely, more desirable.”