Not necessarily worry, but it would pay to get in action right now, says Joe Miller, CEO atenable
The cost-of-living crisis has sharpened the nation’s focus on energy bills and home energy efficiency. For landlords, though, this focus started even earlier. Russia’s invasion of Ukraine pushed gas costs through the (poorly insulated) roof. Even before that, landlords had compelling reasons to look at their assets and plan EPC improvements. You don’t need to be a passionate environmentalist to see why action makes sense today.
What the legislation proposes
The Government’s Minimum Energy Performance of Buildings Bill is the latest initiative targeting private landlords. It proposed a mandatory EPC band C for all new tenancies from 2025. Existing tenancies would need to comply by 2028. Given the Government’s many trials in 2022, you may have missed the news. The Bill’s proposed second reading in May 2022 came and went.
You might feel tempted to breathe a sigh of relief. Perhaps the legislation will never pass, or face long delays. At enable, we see things differently. This delay creates an opportunity. Landlords can get ahead, secure contractors and support their tenants.
Why the direction of travel won’t change
The industry also faces a serious shortage of professionals. Domestic Energy Assessors (DEAs) can barely keep up with current inspection demand. Contractors who deliver the required works face similar strain. Landlords should plan now and avoid the inevitable cost surge near the deadline.
The 2025 date may not slip either. Prime Minister Rishi Sunak has committed to net zero emissions by 2050. Domestic energy costs remain near the top of the political agenda. The Government has little to gain by delaying these rules. We believe landlords should act now rather than join the eventual rush.
Financial and moral reasons to act
The Government has stepped in to help with escalating energy bills. However, acting now to improve your EPC rating clearly serves your tenants. That matters especially as Government support ends in April 2023. Reducing the energy a property needs is a self-evident win for bills-in landlords. Lower energy bills also help tenants during a tough time as food and fuel costs keep climbing. Supporting tenants this way also reduces your risk of voids and arrears.
The impact on property value and mortgages
If those reasons don’t convince you, consider asset values. Improving EPC scores can lift the value of your property. It may also unlock better mortgage rates. Our research shows the gap clearly. An average property with an EPC of C or above is worth £15,000 more than an equivalent property rated D or below.
Many mortgage lenders now offer better rates for energy efficient properties. Banks are also starting to manage their risk more carefully. As the 2024 deadline approaches, landlords may struggle to secure a buy-to-let mortgage on properties rated C or below.
Make a plan today
The Government’s EPC legislation sits on the back burner for now. You probably don’t need to panic just yet. Still, compelling reasons exist to make a plan today. Acting now means you won’t need to worry later either. The benefits stack up: happier tenants, mitigated risks, lower medium-term costs, and more valuable assets. There really is no reason to wait.
About enable
enable’s mission is to make Britain’s homes greener. We help property owners and residents understand their options for improving energy efficiency. enable’s Home Energy Report is a unique product. It helps homeowners and landlords build a detailed picture of their property’s energy efficiency, then plan real improvements. The report goes further than an EPC. It includes real costs, such as additional ventilation, so improvements happen without unintended consequences.
