Landlords could lose up to £9.5k a year if they are unable to make changes to the energy efficiency of their properties ahead of the proposed Energy Performance Certificate (EPC) regulation changes, according to research by Shawbrook. This figure refers to the average amount landlords estimate they would lose in rental income per year if they were unable to rent out their property.
A whitepaper entitled “Confronting the EPC Challenge” published by Shawbrook shows 30% of landlords have not yet made any energy efficiency updates to their properties, with most claiming that works will start within the coming 14 months.
Surprisingly, 10% of landlords said they won’t be starting any works for three or four years, cutting it close to the proposed 2025 deadline.
42% admitted that their tenants would need to leave the properties during the improvement works, with 38% expecting their properties to be vacant for four weeks at a cost of £5k in rental income.
Close to a quarter (23%) of landlords said their properties are currently rated D or below for energy efficiency, so they may be unable to begin a new tenancy from 2025 unless improvements are made, should the proposed regulations come into force.
However, 27% of landlords surveyed admitted to not knowing the energy efficiency rating of their property. In some cases, landlords said they only knew the EPC rating for some, not all of their rental properties.
Consequently, a quarter (25%) of landlords don’t know if, or what, level of work will be needed for their properties to meet the minimum ‘C’ rating under current proposals. A recent roundtable hosted by Shawbrook discussed the lack of consistency in EPC ratings which can create discrepancies within different property types and regions. The group, including key policymakers, landlords and industry figures, suggested the need for a standardisation of the ratings process.
The research found that, on average, landlords expect the improvements to cost £5,900, but only 31% currently have the necessary funds available to pay for the proposed changes.
Emma Cox, Managing Director of Real Estate at Shawbrook, commented:
“We welcome the proposed legislative changes and the opportunity this will provide for the property market to play a key role in the UK’s green revolution. However, we believe more must be done between now and 2025 to support and guide landlords through the process.
“The market is responding with a strong commitment to meet the expected deadline, despite questions still remaining unanswered. The reality is that a failure from landlords to make changes, and from legislators to offer clarity on what needs to be done, could see landlords unable to begin new tenancies on their properties, with a potential detrimental impact on their income stream. Shawbrook’s roundtable which brought together key voices across the industry agreed that in order for properties to meet the necessary EPC ratings, more must be done to standardise the ratings process to ensure that all properties meet the agreed standards.
“For tenants too, the roundtable discussed what impact the proposed legislation could have on them, both in the short and long term. From our findings, landlords are in tune with the needs of their tenants and respond well when asked to make improvements to a property’s energy efficiency by the tenant. As an industry we must make sure we are facilitating and supporting that conversation, making communications available and educating landlords on how best to talk to their tenants about what is being done to a property and what it will mean for them.”