There is a large pool of landlords looking to mitigate the impact of high inflation on their property investments by upgrading their energy efficiency ratings. In the wake of the government announcing upcoming tighter energy efficiency rules, many UK landlords are seeking out more eco-friendly properties.
Starting from 2025, the Government plans to raise the minimum ‘energy performance certificate’ rating from an ‘E’ to a ‘C’ or above. This is to reduce carbon waste across the UK and make homeowners and landlords more mindful of their property’s impact on the environment. For example, you can raise your EPC rating by adjusting your home’s heating. Having good insulation will reduce wasted heat and therefore your home will have a smaller carbon footprint.
These changes will be phased in, starting with new tenancies from 2025 and then all tenancies from 2028. The requirements will apply to all domestic and private rental properties on a lease between 6 months to 99 years. If landlords do not comply, they could face penalties up to £30,000. Under the new EPC regulations, if you want to advertise your property for rental from 2025 and onwards, you will need to give your letting agents an updated and compliant EPC rating for the property they are advertising. You will not be able to advertise your property if it does not comply with the minimum rating of C or above.
With these substantial changes on the horizon, landlords will have several options at their disposal. Property experts speak of three principal choices currently present for landlords: upgrading their properties, selling their rental homes and purchasing a property with a higher EPC rating, or exiting the market entirely. Adjusting your property’s energy efficiency can be costly, therefore many landlords may struggle to protect their return on investment if they find the amendments cost more money than the property returns.
For landlords owning property within the lower margins of the EPC rating, raising their property to a ‘C’ could cost them approximately £5,000 per property, which is a hefty price to fork out amid losses from the pandemic, increased taxes and now, increased regulations.
As such, landlords across the UK will need to think about their next steps and how they plan to adhere to such a tight deadline. Improvements that can increase a property’s energy efficiency include cavity wall insulation, solar panels, and double glazing – all of which can be costly and time-consuming amendments.
If the minimum of ‘C’ is not being met by 2025,
To help move things along, the government recently announced the details of a ‘Boiler Upgrade Scheme’, which allows landlords to claim up to £5,000 towards the cost of a much more environmentally friendly air source heat pump.
The proposed EPC changes may be three years from now, but for most landlords there is no better time than right now to start making plans for possible remortgaging, finding tradespeople, and making property improvements for a higher EPC.
