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8:03 AM, 14th October 2022, About 2 years ago 29
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Nearly two-thirds of landlords say they would sell their properties in the next five years because of the burden of meeting stricter EPC requirements, research has revealed.
The findings from Shawbrook also show that the rising cost of living is driving tenants towards energy-efficient homes in the UK’s private rented sector.
Shawbrook says that nearly three-in-five (58%) of renters say they would be less likely to consider a property with an energy rating of D or below.
And that has, the bank claims, led to more than half (54%) of landlords making efficiency improvements in the last six months.
They also found that nearly two-thirds (63%) of landlords have brought forward upgrades because of sharp inflationary pressures.
The findings – drawing on views from tenants, landlords and mortgage brokers – are part of Shawbrook’s second report on efforts to improve energy efficiency in the rented sector, which continue to be influenced by the government’s proposed changes to energy performance certificate (EPC) requirements.
Although the plans have not yet been put into law, ministers have previously indicated that newly rented properties in England and Wales will have to meet a minimum EPC standard of C by April 2025 – tougher than the current E standard. The measure could also apply to existing tenancies from 2028.
However, despite the possible regulatory changes, Shawbrook’s research shows that a significant knowledge gap remains.
While eight-in-ten (78%) landlords say they have now heard about the 2025 proposals, more than a third know only ‘a bit’ about the plans.
Three-quarters (75%) of mortgage brokers are concerned their buy-to-let clients don’t know enough.
Which is leading to concerns that many landlords could exit the market, with significant effects on the availability of properties.
And nearly two-in-five brokers with buy-to-let clients have seen them exit the market rather than make energy efficiency improvements.
Emma Cox, the managing director of real estate at Shawbrook, said: “We know that many landlords are facing a difficult time because of the economic headwinds in the UK.
“It is therefore important that the sector provides all the support possible to help them meet sustainability goals and be ready for future regulatory changes.”
She added: “As well as the need for clarity from the government about its plans, the industry has a significant role to play in supporting landlords.
“Only by working together can we safeguard the future of the private rented sector.”
Chris Norris, the policy director at the National Residential Landlords’ Association, said: “The efficiency of our housing stock needs to improve but the challenge for the private rented sector is two-fold.
“On the one hand, there is the matter of the split incentive, where landlords are necessarily required to pay for the works but see little or none of the benefit.
“On the other, there is the net cost of the works required, which is substantial to say the least.”
He added: “The investment required in our housing stock represents a potential burden for many landlords that they are highly unlikely to be able to shoulder alone, without significant changes to the tax system and some form of financial assistance along the way.”
Jessie Jones
9:14 AM, 15th October 2022, About 2 years ago
Reply to the comment left by DSR at 14/10/2022 - 17:21
I doubt very much that it would be lawful for a tenant to sign away any EPC improvement works. Compare the idea to signing away any Gas Safe checks; it just wouldn't be allowed.
Shelter and the like would correctly find a tenant who had only agreed to sign such a document through fear of eviction. This just feeds into the media narrative of 'rogue landlords'
For my own part I have now served eviction papers on the poor tenants who occupy my worst EPC property as I know that it will simply not be cost effective to install external wall insulation, heat pumps and solar panels. Need to start the process already to take advantage of CGT relief each tax year, and we don't want to flood the market with ex-BTL properties all at the same time.
HardworkingLandlord
10:30 AM, 15th October 2022, About 2 years ago
Biggest concern I have with so many landlords exiting the market, is the rents will have to shoot up and what the government will do to us as a result. Right now I have just had a shock 20% rise after a period of steady rents (London) which isnt necessarily great news as it is just more tax. However, if I have to do 20-40% further rises in the coming years - we all know its governments fault driving landlords out of business - we would be happier with stable rents and less victimisation but the government and media will retaliate and say to the public "greedy landlords" and simply enforce yet more drastic restrictions like rent controls or inability to evict non-paying tenants. We know from Scotland that this makes things 10 times worse but landlords are whipping boys for the government and we have to take the blame. We are dammed either way and as a die hard long term landlord I'm really considering selling up.
Robert
10:38 AM, 15th October 2022, About 2 years ago
Looking at the EPC for a flat it seems the inspector has made a number of incorrect assumptions For example its a 3rd floor flat in a 4 story block so has another flat below and above The inspector has assumed it has no insulation above or below which is obviously wrong. That didn't matter when the rating was unimportant but does now In reality it has a great insualtion either way with a centraly heated flat above and below I think it may be a good idea to get it reinspected and to be present to make sure it is done properly Would probably jump it up to a C
Ross Tulloch
10:40 AM, 15th October 2022, About 2 years ago
I have sold 3 properties evicting the 4 tenants in each, simply because of the pointless room sizes minimum of 6.51m... Helps no one. Now get dozens of enquires for each room in other properties. It almost seems that the government, and lobby organisations like Shelter do not care how much damage they do for the tenants, as long as they can attack the PRS
Dylan Morris
20:48 PM, 16th October 2022, About 2 years ago
My worry is when Labour get in they’ll remove the 20% mortgage interest tax credit. Yes they really are that stupid.
Jessie Jones
20:53 PM, 16th October 2022, About 2 years ago
Any political party might scrap or reduce this credit , and at any time. I expect it will be seen as a vote winner, until rents have to soar even further to pay for it.
Dylan Morris
21:00 PM, 16th October 2022, About 2 years ago
Reply to the comment left by Jessie Jones at 16/10/2022 - 20:53If it’s scrapped then I’ll have to sell up otherwise I’ll go bankrupt. I can’t pay tax on profits that won’t be there. Wasn’t so bad with low interest rates but Cause 24 is starting to have quite an effect now.
Reluctant Landlord
16:20 PM, 17th October 2022, About 2 years ago
Reply to the comment left by Jessie Jones at 15/10/2022 - 09:14
I beg to differ I think - Gas regs are legal compliance aligned to safety. Even in the case of a tenant not letting you in to do an annual gas check, look at the palava you have to go through as a LL to do this if they refuse entry.
At the end of the day here you are still not legally obligated to seek entry via legal powers to carry this out - mostly LL's evict instead (and rightly so if this is the case)
EPC requirements to a C will only (potentially) be required to legally let the property. You cant enter anyone's home to carry out work without permission so the same must apply. Legally a stalemate. There is no urgent issue in you not insulating the loft or putting in external insulation etc if the home still meets other decent home standards etc, just not reached the C. If you can shoe you have tried to achieve a C (bur for arguments sake the tenant has refused entry) then as far as I can see you have met the requirements for an exemption.
As I said if you explain to the tenant the reality that if works are done that are being insisted on, the effect is that the rent will rise is a FACT. You are only explaining to them the reality of what the government want you to do.
I regard that as a perfectly legitimate conversation to have with the tenant.
Graham Cook
10:03 AM, 19th April 2023, About A year ago
My story. Since 2001 I had been a private landlord managing 7 of my own rental properties (all 2 bed terrace houses). In the last 8 years I have sadly been forced by Central and Local Govt policies stacking up against private landlords to gradually sell them all off. Last week I had to break the news to my last tenant - a lovely guy and a tenant for over 10 years that sadly I would have to evict him. An EPC report had graded the property at D and to bring it up to C would cost me £14,500. The property is valued at £60,000. RIP the private rental sector.