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Landlords lack confidence in ability to get properties up to EPC ‘C’ standard

With less than four years left until the Government wants all new private rented tenancies to be in properties with at least an Energy Performance Certificate (EPC) rating of ‘C’, new research from The Mortgage Works (TMW) has revealed a lack of confidence from landlords about bringing their properties up to the required standard in time. 

Current legislation in England and Wales requires buy to let properties to have at least an EPC rating of ‘E’ or above. However, in order to improve the energy efficiency of rental properties, the Government wants to increase the requirement to a ‘C’ rating for all new tenancies by 2025 and for all existing tenancies by 2028. 

According to the poll of around 750 landlords, more than a third (35%) say they are not confident they will be able to bring their properties up to the required energy efficiency standard. This is not only due to a lack of available capital but also a lack of awareness regarding what it takes to achieve that ‘C’ rating. 

The research highlights a number of challenges facing landlords in their attempts to meet the new sustainability requirements. The biggest issue faced is perceived property constraints, which 51% think will be a hurdle. However, it’s not all doom and gloom as 10% don’t anticipate facing any challenges. 

Landlords with larger property portfolios were more likely to face potential challenges than those with a smaller number of properties, especially when it comes to property constraints (66% for those with 11+ properties vs 49% with 1-10 properties). The same applied to access (50% vs 43%) and disruption (50% vs 43%). 

Green money: More than six in ten landlords say they will need to spend money to get their properties up to an EPC ‘C’ standard, while 14% of them say they will need to spend all of their annual rental income, and perhaps even more than that, on making the improvements to their properties. However, a larger proportion of landlords don’t feel they will need to spend as much, with 29% saying they will need to spend less than 30% of their annual rental income, and 17% not expecting to spend anything at all. 

Where to start: Even if the money is available, 11% of landlords admit they have no idea of what work is required and don’t know where to start, while only 41% say they have either a good or clear idea of what they need to do. However, that figure increases to 55% amongst those with 20 or more properties in their portfolio. 

TMW Green Further Advance: More than a quarter of landlords say a lack of funds is one of the biggest challenges they face. So, in order to help landlords to make their properties more sustainable and undertake the improvements needed, The Mortgage Works launched its first ever Green Further Advance earlier this year, which comes with a rate of 1.49%. It is available to landlords with an existing TMW mortgage and allows loans of between £2,500 and £15,000 up to a maximum of 75% LTV. Landlords can opt for a two or five-year fixed product. 

Daniel Clinton, head of The Mortgage Works, said: “Given the concerns and challenges facing landlords in not only making the necessary improvements, but financing them, it’s perhaps no surprise that more than a third of landlords are not confident they will be able to bring their properties up to the required EPC ‘C’ standard. 

“As more than two in five landlords say a lack of funds or access to finance is one of the biggest challenges they face in ‘greening’ their properties, we are doing our bit to support them with the recent introduction of our Green Further Advance product, with rates up to 50% lower than our standard further advance products. It’s also great to hear that the Government would like to introduce a new financial support package to help people improve the energy efficiency of their homes, however, we hope that any such scheme would also be open to helping landlords meet their requirements.” 

New government investment

On 23 August it was announced that tens of thousands of people across England are set to benefit from warmer, greener social homes, as the government will give social housing providers the opportunity to bid for funding to improve their housing stock.

Local authorities and housing associations will have the chance to secure a share of a £160m first wave of funding, through the government’s Social Housing Decarbonisation Fund. The first wave of funding is expected to upgrade up to 38,000 of the UK’s worst energy-performing social housing properties, with energy performance certificate ratings of D or below, by installing insulation and more energy-efficient doors, windows and heating systems.

This investment will help cut emissions while saving tenants around £170 per year on energy bills, and is part of a wider £9bn government commitment to increase the energy efficiency of homes, schools and hospitals.

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