Landlords gear up ahead of new energy efficiency rules

New energy efficiency rules due to take effect from 2025 which state that landlords cannot rent their property without an EPC rating of C or above have prompted some buy-to-let landlords to undertake a refurbishment in the last 12 months to improve the energy efficiency of their home.

According to research from Shawbrook Bank research, 17% of landlords had made efforts to improve the energy efficiency of their property, rising to 22% of portfolio landlords (landlords with four or more buy-to-let properties).

For example, of all the landlords that had undertaken a refurbishment, 22% had replaced the boiler and heating system in their property, a further 23% had replaced the windows, and 18% had installed new white goods. All these actions could have an impact on a property’s EPC rating and help landlords move closer to achieving a rating of C or above.

Making properties more energy-efficient can boost demand from tenants too. Indeed, one in ten private renters said that they would stay in their current property longer if their landlord made changes to the property which benefit the environment. Tenants were also happy to pay more in rent should landlords make certain changes to their property. 18% of tenants said they’d pay more if windows were replaced, 15% would pay more for a new boiler and heating system, and 10% suggested that installing solar panels would justify paying more rent.

With energy bills predicted to rise substantially next year making changes to a property, to improve its energy efficiency, will not only help the environment but could also save tenants a significant amount.

However, for those landlords who own older properties - which are typically less energy efficient - it can be harder to improve the rating. This could mean that by 2025 some properties could be ‘unrentable’ and ‘unsellable’.

According to data from the Ministry of Housing, Communities and Local Government there are close to 13 million homes in England and Wales currently with an EPC rating of D or below.

John Eastgate, MD, Property Finance at Shawbrook Bank, comments: “For many property owners in the UK, getting their property to a C rating is going to take a lot more than simply installing a new boiler. The reality is that for older properties - some of which may be listed- it will be an expensive exercise to make the necessary changes.

“It’s welcome news that landlords are already acting ahead of the rule change in 2025 and it’s completely right that we should all be considering how to make our properties more energy-efficient and environmentally friendly. Some owners, however, will need support from both lenders, and the government, to make these changes financially possible. Without this, we risk a substantial part of the private rental sector becoming unrentable and therefore unmortgageable and unsellable in 2025. With homeownership still out of reach for many, this could leave us with a shortage of quality homes to rent. More needs to be done to help property owners with these changes and at Shawbrook we are working behind the scenes to look at how we can be a part of providing that support.”