EPC Regulation changes- What Lies Ahead for Landlords in the UK

The lack of urgency regarding the new EPC rules among several landlords is a matter of concern. Worse still, most landlords are not even aware of such changes. It spells gloom for the Private Rental Sector. Non-compliance with the EPC regulations will render properties unsellable or unrentable. Landlords must begin upgrading their properties to meet new energy efficiency goals and help the government achieve net-carbon zero goals. Failure to make these changes before the year 2025 will drastically impact the commercial viability of the property as without the requisite certificate with the right grade to let the property is unlawful.

Improving the energy efficiency of the house or flat

Improving the energy efficiency of the house or flat

The new EPC regulation mandates landlords of new tenancies to make improvements to get a minimum EPC rating of C by 2025. The regulation requires the existing rental homes to comply with EPC rating of B standards from 1st January 2029. The private rental sector needs to pull up its socks to meet energy efficiency standards as soon as possible. It is in the interest of landlords to achieve a minimum rating of C to avert the property from being commercially unviable.

Steps to improve properties having a current EPC rating of E or G.

Steps to improve properties having a current EPC rating of E or G.

The following steps will help enhance the energy efficiency of a property:

- install a smart meter

- Use an energy-efficient boiler

- Install a ground source heat pump

- Install a heat recovery and circulation system

- Replace old bulbs with LED lights

- Insulate roof voids and loft spaces

- Insulate cavity walls to reduce heat losses

- Insulate solid brick walls by creating a timber and plasterboard inner cavity wall with insulation

- Use triple glazing for windows

- Install draft excluders

- Install blackout blinds as well as curtain to mi imise solar gain

- Replace appliances such as washing machines with A+++ grade appliances

EPC regulations from the landlords' perceptive

EPC regulations from the landlords' perceptive

Besides plans to offer lower interest rates for green mortgages, property owners of green homes having EPC ratings of A or B will pay lower energy bills because of higher energy efficiency. We believe efficiency savings on bills could be between 30 to 40 percent.

Many landlords have yet to afdress the fact that properties within their portfolio may be 'stranding' that is, that left unimproved they will become less desirable to both renters and would be buyers. Demand, amd therefore marketability of all but properties with EPC ratings to at least B and C is going to be an issue. Landlords looking to grow their portfolios will invest in properties with an EPC rating of B and C and soon will even pay more to reflect they will not need to lose rent whilst a property is empty and being refurbished.

Practical recommendations to support older style properties where energy efficiency is poor

Practical recommendations to support older style properties where energy efficiency is poor

These are a few recommendations mentioned in a recent report by UK Finance:

1. Stamp duty rebates- Making amendments to the stamp duty land tax to incorporate energy efficiency upgrades.
2. Minimum energy rating- Implementing requirements for minimum energy rating to facilitate the sale or re-mortgage of owner-occupied housing. The government should plan on exempting the vulnerable classes of properties, e.g., listed buildings.
3. Supporting the vulnerable population- Considering provisions for government grants to cover part or entire upfront costs to upgrade EPC rating
4. EPC to reflect energy efficiency improvement in real-time - The present way of determining Energy Efficiency through EPC ratings needs revamping as the database takes a long time to update.
5. Prioritising social housing by providing access to funds- Social Housing is the most suitable sector for installing heat pumps as generally by being in control of the estate land to do so can be found. A landlord owning a single flat without a garden cannot.
6. Enable funding by improving the scope of the Social Housing Decarbonisation Fund and target social housing areas for retrofitting to help minimize energy bills.
7. Support for the private rental sector

The demand for new-build homes is on the rise as these homes comply with energy efficiency standards. The adoption of EPC regulations will severely constrain the private rental sector. The worrying economic situation in the UK and the rising cost of living call for full support to the Private Rental Sector for complying with eco regulations such as EPC rules.

The considerable investment to upgrade existing properties and meet energy efficiency standards is too much for the landlords to bear alone. There is a need to provide tax benefits and financial help to landlords to help them meet UK's sustainability goals. So in summary, if your Letting Agent has not yet cost what it will cost to get your rental properties up to EPC grade C then it is time to get them focussed now. Alternatively, speak to the Life by Ringley Team. We operate for private landlords and the build-to-rent sector throughout the UK.

The Path Forward: Balancing Compliance and Investment in EPC Upgrades

As landlords look to meet the new EPC regulations, they must balance the financial burden of necessary property upgrades with the potential long-term benefits of energy efficiency. While the costs associated with improving properties to meet EPC standards can be significant, these investments should be viewed as future-proofing the property. Not only will landlords avoid the risk of their properties becoming unrentable or unsellable, but they will also benefit from lower energy bills and increased tenant demand due to the growing preference for more energy-efficient homes. The shift towards greener properties, supported by incentives like green mortgages and tax breaks, offers a pathway for landlords to both comply with regulations and enhance the value and marketability of their rental portfolios. However, to ease the strain on landlords, the government must consider increasing support for the private rental sector, including grants and financial incentives to make these necessary upgrades more affordable.