Residential properties will not escape EPC upgrades

Energy Brokers

As the mortgage industry eagerly awaits the government’s final proposals for what energy efficiency measures landlords will need to undertake, we should be under no illusion – similar rulings will almost certainly apply to residential properties in the foreseeable future.

Up until now, much of the focus around the upgrades has centred on the private rental sector and what it will mean for landlords and the buy-to-let market. Yet given the government’s commitment to reach net-zero carbon emissions by 2050, it seems implausible they will bypass the need to upgrade the UK’s vast residential housing stock also.

The UK’s private rental housing makes up 20% of the country’s housing yet is comprised of some of the least energy efficient properties in the UK – making it a good place to start. We should all be keeping a close eye on the outcome of the consultation however, as this is likely to crossover into the residential market in the not-so distant future.

So, what is proposed? The final rules are due to be released imminently and are widely expected to stipulate that landlords must take steps to ensure their properties hold an Energy Performance Certificate (EPC) of ‘C’ or above from 2025 for new tenancies and 2028 for existing ones. The current minimum energy efficiency standard for rental properties is a band E.

he existing price cap of £3,500 to carry out improvements is also expected to be upped to £10,000.  This means a landlord will need to show they have carried out at least £10,000 of work. If they have still not reached the magic ‘C’ banding by this point, they will be exempt.

For landlords with more than one property, the cost could run into thousands of pounds and will could mean much more than installing a few energy saving lightbulbs.

Given just 40% of British homes have an EPC rating of C or above, the task ahead for landlords is significant and when it does eventually translate into the residential market, it will be bigger still.

We are already starting to see lenders take steps to increase awareness of EPC ratings amongst homeowners. Just recently we saw NatWest launch a feature on its mortgage hub which shows homeowners the EPC rating of their property. Its ambition is that 50% of its mortgage book will have an EPC rating of C by 2030.

Yet with more than half of all UK properties owned outright, upgrading mortgaged properties will only be half the battle.

Here at SDL Surveying we are also gearing up to help lenders, landlords and homeowners with the EPC challenges that lie ahead. This is going to be a big focus for us as a business going forward and will be core to our proposition.

As well as working on products to tackle this specific issue, during Q2 of this year, we will ensure all of our surveyors complete their Domestic Energy Assessor training. This will then allow some of our surveyors to carry out assessments for landlords and homeowners, outlining the work and cost needed to reach a C banding.

It is also worth noting that a current EPC only lasts for 10 years, which means many property owners may be working from an outdated report.

In the current climate, the Halifax estimates that improving a property’s EPC rating could save a homeowner over £300 on bills each year for every band it moves up. Against a backdrop of record high gas and electricity prices, a case can be made for spending thousands of pounds to make energy efficient upgrades.

However, as we hopefully start to see utility costs stabilise, over the next few years, that argument might become a harder one to make.

It is still early days, but it is hoped that some innovative thinking from government and lenders will be enough to encourage homeowners to make the necessary upgrades.

One thing is for certain – change is coming, it’s just a matter of when.

Simon Jackson is managing director of SDL Surveying 

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