Since 2008, Energy Performance Certificates (EPCs) have been required by law in England before a property can be marketed for sale or rent and as of 1st April 2021, all rental properties (not just new tenancies) must have a rating of E or higher to be legally let.
Failing to do could see landlords being fined up to £5,000 so if your current rental property falls below the E rating or is on the cusp, you have to ask yourself: is it worth the time and money to lift the buy-to-let’s energy rating or are you better off selling up?
Cost versus reward
At last count, it was estimated that around 200,000 landlords have an F or G rated property in the UK and they are expected to pay up to £3,500 towards the cost of improving energy efficiency standards for each rental – that’s over four months’ rent for the average landlord (excluding London).
If upgrades cost more than this, landlords may be eligible to apply for a ‘high cost’ exemption once they have paid for improvements up to this cap but anecdotal evidence points towards this being unlikely. And time is quickly running out to make the mandatory E grade - perhaps it’s time to sell your property fast.
If landlords have done their calculations correctly, however, investing in major improvements could increase the property’s value in the long run, with the ongoing benefit of income from rent.
According to the Residential Landlord Association (RLA), the average cost of enhancing energy efficiency is £1,200 per property. And if research from MoneySuperMarket is to be believed too, you could boost the value of your rental property by almost £25,000 by achieving a higher EPC rating. There is, however, no guarantee you’ll claw back any investment from higher rents (especially if the market dips), and the hassle of booking trades and arranging access can prove testing.
EPCs: higher still
The Government’s published target is to raise the minimum EPC for all privately rented homes to Band C. This would apply to new tenancies from 2025 and all tenancies from 2028, with increased penalties of up to £30,000 for landlords who can’t meet any new minimum standards.
To achieve this new rating in the near future – or achieve an E grading in many current properties - landlords will have to undertake some series home improvements that go beyond simply switching to LED light bulbs. Works to upgrade insulation (loft and cavity wall); installing or replacing double glazing and replacing inefficient boilers may be on the cards – three major projects that are not cheap or easy to facilitate.
Have you got the energy to be bothered?
If you’re overwhelmed by the raft of increasing energy efficiency legislation and would prefer to exit the rental market, we can help you sell your buy-to-let property fast. Contact us to get your no-obligation cash offer – we’ll even consider properties with an EPC rating below E, flats with a short lease and rentals with sitting tenants.