In anticipation of impending government regulations regarding Energy Performance Certificates (EPC), landlords are swiftly adapting their property acquisition tactics, leading to apprehensions over the fate of homes with low E or F certificates in the market. A recent survey conducted by mortgage firm Paragon, encompassing 1,200 landlords who have recently purchased or are contemplating property acquisitions, revealed a significant shift in their purchasing criteria. A staggering 25% of surveyed landlords have already revised their preferences to prioritize properties that either meet the anticipated Minimum Energy Efficiency Standards (MEES) or require minor enhancements to comply with the impending regulations.
The study further divulged that nearly two-thirds of landlords intend to factor in EPC-related improvements when considering future property acquisitions for rental purposes. The government’s proposal stipulates that by April 2025, new rental tenancies must uphold a minimum EPC of C, and this standard should be met by all tenancies by 2028. However, despite the formal announcement of these proposals over two years ago, recent indications from Michael Gove, Secretary of State for Levelling Up, Housing and Communities, hint at potential delays in the implementation of these regulations.
Paragon’s research underlines the profound influence of these proposals on landlords’ overarching business strategies. Notably, almost two-thirds of landlords have taken some form of action in response to the impending regulations. This proactive approach encompasses a variety of initiatives, with 20% of landlords having already upgraded their properties to achieve an EPC rating of C or higher. An equivalent proportion of landlords are currently in the process of retrofitting their properties with energy-saving measures to elevate their EPC rating to meet the proposed standards.
Interestingly, around 10% of landlords have chosen to divest their properties rather than bear the cost of upgrade work. Furthermore, 7% of landlords have expressed uncertainty about their properties ever attaining a ‘C’ certificate.
Louisa Sedgwick, Commercial Director at Paragon Bank, weighed in on the current situation. “Michael Gove’s recent comments suggest a growing likelihood of a delay in the implementation of new energy efficiency standards for the private rental sector,” Sedgwick remarked. “Nevertheless, it’s heartening to observe landlords building upon the strides made over the past decade to enhance the sustainability of privately rented homes.”
As the real estate landscape braces for potential regulatory shifts, landlords are demonstrating a proactive stance to align with anticipated standards, yet concerns persist regarding the fate of properties that fail to meet the forthcoming EPC criteria. The ongoing evolution of this situation remains closely watched by stakeholders within the property market.