Are EPC changes for private rentals really happening? Will reforms be kicked down the road? How bad is energy efficiency in the lettings market? LandlordBuyer discusses the latest.
What’s the current timeline?
Ed Miliband is the current Energy Secretary and he is a vehement net zero supporter. Since the election, he has reiterated the Government’s pledge to reform the private rental market. Part of this is to toughen up energy efficiency standards. In 2028, the Government wants all new tenancies to achieve a mandatory EPC rating of at least a C (up from the current E). The higher requirement will apply to all buy-to-lets in 2030.
These are just proposals at this stage and a consultation on the suggested EPC reforms is currently running. A survey is open to anyone to complete but closes on 2nd May 2025 – so be quick if you have an opinion.
Are landlords prepared?
Given the suggestion of a compulsory EPC of C has been swirling for a number of years, there is a surprising level of blissful ignorance. Research by epIMS found 42% of landlords are unaware their buy-to-let may need an EPC of C in the near future. Staggeringly, 27% admitted they don’t know the current EPC rating of their properties.
What’s the rating of current rental stock?
Many landlords will be hoping their buy-to-let already has an EPC rating of C, so they don’t have to spend money on energy efficiency improvements. Sadly, analysis shows this is not the case. When Foundation Home Loans crunched the number from Q3 of 2024, it found 67% of landlords owned at least one buy-to-let that had an EPC of D or lower.
The Energy Saving Trust conducted its own research, looking at individual rental properties rather than landlords. It found only 48% of private rented homes in England currently have an EPC rating of C and above. If the stock stays this way, more than half of England’s buy-to-lets will become illegal to rent out.
What’s the outlook for landlords hoping to make purchases?
Further research by epIMS painted a bleak picture for landlords who want to expand their portfolios or sell up existing lets and buy in more lucrative locations. When it analysed all of the properties listed for sale in autumn 2024, more than a third had an EPC rating below a C.
Landlords hoping to buy in cities were the most limited, with 46% of properties for sale in Bradford possessing an EPC of D or worse. Also faring badly were Edinburgh (39.6%), Brighton (39.4%), Bristol (33.9%) and Nottingham (33.5%).
What’s the cost of upgrading to a C EPC?
Landlords committed to staying in the rental market will need to start retrofitting soon if they have EPCs of D or E. Retrofitting is the industry’s new buzz word – installing eco-friendly technology – such as solar panels, air source heat pumps, the latest boilers, LED light bulbs and extra insulation – to an older property.
Retrofitting is not a cheap exercise. According to Government data, the cost to meet incoming EPC standards will be an average of £6,864 per dwelling. Not factored in is an extended void period required to complete complex or disruptive work.
How can landlords mitigate EPC retrofitting costs?
With many buy-to-lets generating minimal profits or teetering on the edge of making a loss, not every landlord will be able to absorb retrofitting costs. It may be worth considering:
- Commissioning a new EPC certificate in hope the old one was issued in error or that past improvement works warrant a reclassification upwards
- Making future investments in the new build sector, where EPC ratings are more likely to be B and above
- Buying future rentals in the resale sector but paying a premium for properties with the best EPC ratings
- Looking at an additional borrowing mortgage that carries 0% interest specifically for energy efficiency home improvement projects
- Increasing rents in hope any extra will cover retrofitting costs
- Do nothing and hope the proposals don’t come to fruition or are delayed well into the future
- Sell any buy-to-lets than have an EPC rating of D and below
If you feel selling up and exiting the buy-to-let market is the most appealing and hassle-free option, get in touch with LandlordBuyer. We are making cash offers on tenanted and vacant rentals with all EPC ratings – even those graded D and E. Start your sale online now or get in touch for free, specialist advice.
We buy single properties and portfolios for cash – and we won’t ask you to service notice on your tenants. Leave your tenants undisturbed and let us handle your sale.