Over half (52%) of landlords are considering selling properties due to impending Energy Performance Certificate (EPC) changes that will force them to upgrade their homes.
The government plans to increase the minimum EPC requirement to C for all new tenancies by 2025 and for all existing tenancies by 2028.
For landlords with a lot of properties with a poor EPC rating this is a costly problem to solve.
So far the only bone thrown to landlords has been a £5,000 grant incentive to switch from gas boilers to carbon-free heat pumps, but that barely helps improve the EPC rating under the current way EPCs are calculated.
Timothy Douglas, policy and campaigns manager at Propertymark, said: “The private rented sector has its part to play, but in recent years, landlords have faced considerable legislative change, and during a time of financial strain due to the COVID-19 pandemic, which will continue to have lasting effects, the costs of bringing housing stock up to EPC Band C will be a significant challenge for many.
“If the alarming number of landlords who have considered selling up within The Mortgage Works report go on to do so, it will have a detrimental effect on not only the UK government’s ambitions to reach Net Zero, but also for the thousands of renters looking to be housed as stock levels deplete. In some parts of the market, this will put additional burdens on local authorities and increase demand for social rented housing as not everyone can afford to buy.
“To support the longevity of the private rented sector, the UK government must introduce realistic and achievable targets that take into account the diversity of the country’s housing stock. Furthermore, without incentives and sustained funding options that landlords can tap into, it is unlikely that the UK government’s proposals for energy efficiency will be met.”
Landlords with larger portfolios are the most likely to sell some or all of their affected properties.
A third (33%) of investors are unsure what they’d need to do to get their homes to a C standard.
Most plan to improve their properties by fitting traditional insulation, a quarter (25%) are looking to upgrade the boiler, while a similar proportion (24%) are looking to upgrade existing utilities.
Domestic energy use accounts for 14% of UK emissions, while 90% of England’s homes use fossil fuels.
Some mortgage lenders have released green lending products to help landlords make changes to their properties, which is likely why TMW is publicising green energy issues.
The lender has launched a service called Green Further Advance available to landlords with an existing TMW mortgage, offering loans between £2,500 and £15,000 up to a maximum of 75% LTV to pay for upgrade work.
Daniel Clinton, head of lending at TMW, said: “With less than four years before all new tenancies need to be in properties rated EPC band C or above, there are still landlords who need to undertake remedial work on at least one of their properties.
“They are therefore understandably concerned about how they will both fund the work, find someone to do it and have it completed in time.”
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