Your Business and Industry

02 September 2021

Do your portfolio landlords have full awareness and understanding of the new EPC legal requirements?

A growing number of landlords and homeowners are becoming more environmentally conscious when it comes to their homes and investments... but is it enough? 

The Government has itself set an ambitious target of net-zero greenhouse gas emissions by 2050, and it’s widely thought that in order to do this we’ll need to eliminate energy inefficiencies from UK housing stock by 2030.

As outlined in a January 2021 paper from the Department of Business, Energy & Industrial Strategy - Improving the Energy Performance of Privately Rented Homes in England and Wales – proposals are in place to raise the energy performance standard to Energy Performance Certificate (EPC) energy efficiency rating (EER) band C; with a phased trajectory for achieving the improvements for new tenancies from 2025 and all tenancies from 2028.

Since 2008, all rental homes in England and Wales have been required to have a valid EPC and new rules introduced in 2018 mean that rental properties must have an ‘E’ rating or above.

Our latest Landlord Panel research in partnership with BVA BDRC for Q2 2021 showed that just under six in 10 landlords claim to have full awareness and understanding of the new EPC legal requirements. The data did suggest that full awareness and understanding of the requirements increases in line with portfolio size, ranging from 46% for single property landlords to 66% for 20+ property landlords. 18% of landlords were said to be completely unaware of the requirements, with this figure almost doubling for single property landlords (34%).

The data also highlighted that the average landlord has 2.8 properties with an EPC rating below “C”, although just over a third of landlords have no properties with an EPC rating below “C”. On a regional basis, landlords who let property in Yorks & Humber were said to have the highest average number of properties with a rating below “C” (4.6), whilst those with properties in the North West have the least (2.1).

Additionally, due to the new legislation, 62% of landlords say they will be less likely to purchase properties with an EPC rating below “C” in the future. Around a quarter claim EPC rating compliance will make no difference to their likelihood of purchasing “D”, “E”, “F” or ”G” rated properties and smaller landlords are significantly more likely to be unsure about the impact of the legislation on their future purchasing compared to their larger counterparts (1-3 properties: 12% vs. 4+ properties: 7%). (slide 70)

It’s still relatively early days for the green mortgage market but it’s encouraging to see an array of lenders and advisers extending their expertise into this space

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