Over two-thirds of landlords, or 67%, have properties not meeting EPC Band C targets proposed for 2030.
- Government aims to improve energy efficiency, requiring rental properties to achieve EPC Band C by 2030.
- Awareness of energy standards is high, yet comprehensive understanding lacks among some landlords, especially those with multiple properties.
- 42% of landlords plan improvements; funding sources vary from savings to government grants.
- Anticipated costs for upgrades are significant, and landlords plan various strategies to meet standards.
Research commissioned by Foundation Home Loans reveals a significant gap in energy efficiency among landlords. The findings show that in the third quarter of 2024, 67% of landlords have at least one property that fails to meet the Government’s proposed Energy Performance Certificate (EPC) Band C targets. This research spanned 720 online interviews conducted by Pegasus Insight, reflecting the broader concern from the Government’s consultation to mandate Band C for rented homes by 2030.
As it stands, private rented properties can continue renting if they meet EPC Band E, while social rented properties do not have a minimum energy efficiency requirement. The proposed changes aim to enhance energy efficiency across the sector, with the Government stressing the potential benefits for energy usage and carbon footprint reduction.
The study highlights that 92% of landlords have some awareness of EPC requirements, though only 67% claim a thorough understanding. Particularly, landlords with four or more buy-to-let mortgages exhibit a lower grasp of the standards, at just 62%, compared to their counterparts.
Regarding compliance strategies, 42% of landlords indicate plans to upgrade their properties to conform to the new standards. Among these, a quarter are considering minimal-cost improvements to continue renting, whereas 14% aim for enhancements that increase property value over the long term. Notably, 3% of landlords favour upgrading and then selling their properties to recoup investments.
Conversely, 34% of landlords are opting to sell properties without implementing any upgrades, highlighting potential reluctance or financial constraints that could impede energy efficiency progress. Additionally, 17% are uncertain of their approach, whereas a small minority, 3%, plan to maintain their current letting activities without making changes.
In terms of financing these upgrades, landlords have expressed a reliance on diverse funding sources. A significant proportion, 71%, intend to use personal savings. Meanwhile, 42% expect to increase rents to cover costs, and 28% plan to apply for Government grants. Equity release from property portfolios and further advances from mortgage lenders complete the funding landscape landlords are exploring.
On average, landlords predict expenditure of £12,000 per property to achieve EPC Band C. Proposed upgrades include solid wall or floor insulation (37%), loft insulation (26%), boiler or heating system enhancements (25%), and solar photovoltaic panels (22%). However, uncertainty lingers, with 13% unsure about necessary improvements and 37% unclear on the overall cost implications.
Grant Hendry, Director of Sales at Foundation Home Loans, comments on the situation stating, “With potential new legislation aiming to raise energy efficiency standards and tackle fuel poverty for millions, landlords face important decisions around future-proofing their investments from an EPC perspective.” He notes that the research not only illustrates a growing awareness among landlords but also emphasises the financial and strategic considerations necessary to meet the anticipated standards.
Landlords face significant challenges in meeting future energy efficiency standards, necessitating strategic planning and financial considerations.
