With the proposed deadline to meet the Energy Performance Certificate (EPC) requirements for rental properties only a couple of years away, many landlords throughout the UK are currently in the process of assessing their property portfolios and weighing up the cost of renovations to ensure they can satisfy the forthcoming changes.
The regulations, which require all rental properties to have a rating of C or above by 2025 for new tenancies and by 2028 for existing tenancies, are part of the Government’s long-term plan to create greener homes and meet its carbon emissions net-zero target by 2050.
Yet feedback from landlords suggests the proposed changes are creating inequality in the housing market and could lead to a shortage of affordable rental stock in the private rental sector, particularly in less affluent parts of the country.
One of the fundamental concerns is that renovations on older housing stock is proving too costly, with insulating properties such as Victorian stone terraces in Burnley for example, costing in the region of £15,000. This is forcing some landlords in the area to sell their properties thereby removing them from the local private rental market as improvements will drive rents upwards and become too expensive for local tenants.
The practicality of achieving the new EPC targets on older housing stock has been a hotly debated topic in the market since the regulations were announced, with many industry commentators calling for an exemption from the full measures or a relaxing of the rules for certain types of property. This includes Victorian stone build terraces, where renovations could lead to significant alterations that would ruin both the internal and external style of the property, leading to a drop in market value.
Another concern is that if the new EPC targets are making renting older style housing such as Victorian terraces unviable and landlords are forced to sell, where will all these tenants live? The UK has the oldest housing stock in Europe, possibly the world, with 21% of housing stock built before 1919 and 38% before 1946, according to the Centre for Ageing Better.
Add to this the fact that the average Victorian property has an EPC rating D or below and that a total of 13 million people – or one in five – rent from a private landlord, and it is clear to see why landlords have concerns.
Evidently, there is still a great deal of uncertainty surrounding the EPC deadline and it is clear that further clarity and education is needed to help landlords understand what the requirements are, along with possible government-backed incentives to help support the changes in the short term.
For those landlords concerned about the requirements and the ways in which they can fund any future property improvements, speaking to a broker can help provide clarity on what the requirements are and what options are available. This includes finding a practical solution to accessing the finance they need to fund any necessary changes to ensure they stay in the market and keep the rental sector alive.