Proposed EPC Changes

From 2025, under current proposals all newly rented properties will be required to have an EPC rating of C or above.  Currently, properties only require an EPC rating of E or above.

Existing tenancies will have until 2028 to comply with the new rules.

Following this news, there is a concern that a substantial amount of properties risk potentially being declared “unrentable” and therefore “unsellable”. With older properties falling out of line, this could leave current owners unable to sell their properties without doing the necessary improvements. It isn’t going to be possible to ignore this energy drive towards improving efficiency.

Landlords that have been renting out properties for over 10 years are more likely to be unaware of the new rules coming into force.

Nearly a quarter of landlords said their properties are currently rated D or below for energy efficiency. This means that from 2025, unless improvements are made, they face being unable to begin a new tenancy.

Tenants may see their rents go up as they pass on the cost of improving their properties. Once these improvements have been made, tenants expect their rents to naturally rise due to the improved EPC ratings.

On average it is expected that it will cost landlords £6,000 to make improvements to each of their properties. With the cost of building materials ever increasing, that figure it likely to rise in the next few years ahead of the deadline.

We as brokers, need to help support landlords and encourage them to make improvements as quickly as possible. It’s important that lenders and brokers work together to come to practical and effective solutions.

Finance may be needed to help landlords manage the cost of these improvements. We would expect in the longer term, a greater range of incentives and green mortgage products entering the market. Things such as bridging loans may be something to consider. Bridging can provide the flexibility and growing needs of the market. This could be a useful tool to mitigate the impacts of EPC changes as it is a way of providing a quick cash injection to make improvements ahead of a deadline.

Are you a landlord, concerned about your EPC rating? Give us a call and we can help navigate you through these challenging next steps.