Quarter of landlords have D-rated properties or below

Supply in the rental market faces a new challenge as close to a quarter of landlords say their properties are currently rated D or below for energy efficiency, according to a new report Confronting the EPC Challenge from Shawbrook Bank.

23% of landlords surveyed said that their properties were rated D or below, however, the number could be higher with a further quarter (27%) of landlords admitting they don’t currently know the EPC rating of their properties.

Older homes are more likely to have a lower EPC rating and require improvement. 30% of landlords with Victorian era properties in their portfolio said they were rated D or below.

Under new proposed regulations, landlords may be required to make changes to their properties to improve the energy efficiency by 2025 for all new tenancies. This means bringing their property’s EPC rating up to a C or above. For existing tenancies, landlords have until 2028.

For landlords with older properties, making these improvements could be a costly exercise.

Indeed, currently two in ten landlords don’t have the necessary funds required to begin refurbishments of their properties.

This is particularly the case with older landlords – those aged over 55. A quarter of this group said they don’t currently have the funds available to make changes to their properties to bring them in line with the proposed requirements.

Should landlords be unable to make changes to their properties by the deadline they may be unable to rent their properties so could be left with properties that are unmortgageable and therefore unsellable. This could limit supply in the market, at a time when many are reliant on the Private Rental Sector (PRS).

Many landlords are set to make changes to their properties. The English Housing Survey found that there has not been an increase in energy efficiency among housing stock in the PRS over the last year – despite an increase in housing stock in England overall.

In order to make changes in time for the proposed deadline, landlords have expressed the need for support from the government and industry.

Close to half of landlords said they would benefit from guidance on what the EPC legislation means specifically for landlords, while 37% want to see incentives to make changes such as favourable borrowing rates.

A third of landlords surveyed called for guidance on timings on how to phase the implementation of changes, and 29% wanted to see signposting to suppliers who could help them make improvements to their properties. The same proportion also wanted to receive guidance on how to manage tenants during the improvement process.

Landlords were also interested in speaking with other landlords about the issue, with 21% looking for a shared space to discuss problems and share solutions.

In response to this, Shawbrook has established a working group of industry professionals, landlords and policy makers together to find possible shared solutions to the challenge.

Emma Cox, Sales Director at Shawbrook Bank, comments:

“Improving the energy efficiency of properties is a vital step in reducing our impact on the environment, however, this will not necessarily be a straightforward process for landlords.

The UK has a significant proportion of older properties that are particularly challenging to improve, and many landlords remain in the dark as to their properties’ current ratings.

Landlords will require further support from both the industry and the government in order to make the changes in good time.

Indeed, with the cost of labour and supplies rising, it could be a costly exercise for all landlords, but there are solutions available.

“It is in everyone’s interest that properties are made more energy efficient, however this cannot be done half-heartedly, and we must ensure sufficient resources are provided so that landlords can make the appropriate changes to benefit their properties and their tenants.

We hope that our forthcoming working group provides a space for landlords and the wider industry to share ideas and solutions to confront this challenge, and we look forward to sharing the findings in the coming weeks and months.”