Proposed minimum energy efficiency standards regulation could leave residential landlords facing a £17.9 billion bill.
Analysis by Knight Frank suggests the government’s proposed EPC requirements of rental properties needing to meet a rating of C or above by 2025 could increase the likelihood of landlords leaving the sector.
It found whilst 13% of renters were willing to pay a premium for a low carbon home, the average annual rent in 40% of local authorities wouldn’t cover the average £9,260 spent to bring a property up to the proposed standard.
Government plans are still at the consultation stage but if they go through landlords would have to bring their rentals to an EPC rating of C or above by December 31, 2025 for new tenancies and by December 31, 2028 for all existing tenancies.
Currently there are 4.8 million private rented households in England and of those, 60% have a rating of EPC D or below. Just over 2% have an EPC rating of F or G.
Previous analysis by Knight Frank showed that of 30,000 homes which had improved their energy performance from a D, the average cost spent to upgrade to at least a C was £9,260. For those on a lower grade, this figure was doubled to more than £10,000.
Sheldon Bosley Knight’s associate director, Nik Kyriacou said: “While there are undoubtedly considerable savings to be made by improving a property’s EPC rating, these may take time to filter through.
“Perhaps more importantly, it’s a considerable outlay for landlords, coming at a time when many are having to factor in higher mortgage costs, the increased cost of living, changes to mortgage interest relief and the erosion of capital gains tax allowances.
“The government should do all it can to help those landlords with grants or other financial assistance in order for them to be able to meet their obligations.”