Cost of property upgrades to meet 2030 energy efficiency standards according to new EPC rules for landlords
The UK government's plans to enhance the energy efficiency of rental properties are set to escalate expenses for landlords, who are already grappling with elevated mortgage rates, reduced rental yields, and novel regulations outlawing no-fault evictions. The drive aims to improve the energy efficiency of rental homes, with a minimum Energy Performance Certificate (EPC) rating of C for all rental dwellings by 2030.
The proposed upgrade costs for landlords' properties may range between £6,100 and £6,800, as suggested by the government. However, other studies have suggested a higher cost, with an estimated average investment of £8,000 for each sub-C rated rental property, potentially reaching an aggregate investment of £64,000 for an average landlord with eight rental properties over the next five years.
Concerns have been expressed that these standards may prompt more landlords to exit the rental market, exacerbating the existing rental crisis. The National Residential Landlords Association (NRLA) has emphasized the necessity of funding to assist landlords in making the required adjustments. The NRLA proposes addressing the scarcity of skilled tradespeople, as well as offering a tailored financial package to support investments in the energy-efficient improvements recommended by the Committee on Fuel Poverty and Citizens Advice.
A phased approach, such as setting the 2030 target for new tenancies and 2033 for extended tenancies, has been suggested by Paragon Bank to ensure a more harmonious transition. This proposal aims to alleviate the anticipated imbalance between demand and supply in the rental market.
An energy performance certificate grades a property on its energy efficiency from A to G, with A representing the most energy-efficient homes. All homes listed for sale or rent must have a valid EPC to offer potential buyers and tenants an idea of the gas and electricity bills they can expect. Currently, rental properties must have a minimum EPC rating of E, but plans to push the minimum to C by 2030 were initially scrapped in October 2023 by the former prime minister, Rishi Sunak, only to be revived by the current Labour government.
Landlords have the flexibility to choose how to achieve the energy efficiency standards, with measures such as loft insulation, cavity wall insulation, and double glazing among the initial improvements required. The Department for Energy Security and Net Zero (DESNZ) has established a maximum cap of £15,000 per property for landlords, while some may qualify for affordability exemptions, reducing the cost cap to £10,000. Although approximately 2.5 million privately rented properties currently have an EPC rating below a C, it has been suggested that meeting the C requirement may be easier than anticipated for landlords. Small improvements can have a significant impact on an EPC rating, and accredited energy assessors are advised to offer guidance on the most effective adjustments.
- In light of the UK government's plans to improve the energy efficiency of rental properties, landlords may need to invest significantly in 'personal-finance' to meet the required improvements, with estimates suggesting an investment of £8,000 for each sub-C rated rental property.
- The National Residential Landlords Association (NRLA) has highlighted the need for 'finance' to help landlords cover the costs of making their properties energy-efficient, proposing a tailored financial package to support these investments.
- The Committee on Fuel Poverty and Citizens Advice recommends measures like loft insulation, cavity wall insulation, and double glazing to help landlords achieve the energy efficiency standards, which are crucial in the context of 'climate-change' and 'environmental-science'.
