Last week, the government confirmed a U-turn on the EPC for landlords, scrapping the former proposals. Many of you will recall the confirmed push back of the ban on the sale of petrol and diesel cars by another five years. But the government also decided to relax the forthcoming EPC requirements for landlords across the country. We find out more and look at who wins; landlords, renters, or nobody…

What does the U-turn on the EPC for landlords mean?   

Up until the change in decision, the initial proposals stated that landlords would require a minimum EPC rating of C by 2025 for all new tenancies. The same rating would then apply to all rental properties in 2028. However, with the legislation being scrapped, the current requirements are set to remain as they are today, at level E. Instead of enforcing changes with regards stricter minimum energy efficiency standards for rental properties, the government urges landlords to make changes to their properties where, when and how they can.

Why has the government made this change?

The government’s overall aim is to remove financial pressure from both landlords and tenants. Landlords would need to make a significant financial investment in their properties to make the necessary changes to meet energy efficient standards. And the fear is landlords will increase rents for tenants to compensate for the expense. With the rental market already experiencing some of the highest rents we have ever seen, this could bring further damage to the sector. Tenants are struggling with the overall increased costs of living, above and beyond the rent they have to pay. Perhaps scrapping the EPC proposals is the right thing to do after all…

Many landlords were ready for the EPC regulation changes

The U-turn from the government has come half way through 2023, less than two years before the 2025 deadline for an EPC rating of C for new tenancies. Of course, a lot of landlords got cracking straight away to make the necessary changes and avoid fines. In fact, according to research from Shawbrook, 80% of UK landlords said they were already prepared for the 2025 EPC regulation deadline. And of these landlords, 30% confirmed their properties had a rating of A-C. A further 50% had plans in place to improve their properties before the 2025 deadline. And according to more of the statistics in the research, the mean average amount landlords have spent on improving or investing in their property in the last year is £25,148. No small amount.
There are two ways, in our opinion, in which these landlords have not wasted their time, effort or money. The first is that they will likely be in a better position to rent out their properties if they have an EPC with a higher rating. And the second is that they are in a good position should government change their minds again and bring the regulations back into force in the near future.

Tenants want energy efficiency

It’s a fact too that tenants would prefer to rent a property that is more energy efficient. We see and hear that from the tenants we work with here in Altrincham. With energy bills remaining high, and more worryingly, unpredictable in the near future; tenants prefer properties with a high EPC rating (ideally C or above). There might well be increased rents or longer tenancy terms associated with properties which have seen recent improvements. But many renters are prepared to pay the price if it means avoiding extortionate gas and electric bills, or a freezing cold home.

Some could argue that improving the energy efficiency of rental properties also improves their overall condition, making them cleaner and healthier to live in. By scrapping the EPC proposals, are we prolonging the availability of poor standard rental housing stock?

What about the landlords who left the industry?

The news of the proposed EPC changes has been around since 2018. And in this time, with Covid thrown into the mix and the increased cost of materials to carry out property improvements, some landlords sold off their rental properties. It hasn’t been an easy couple of years for buy-to-let landlords especially, and these factors along with other legislation changes saw many decide to quit letting properties altogether. Here in the Altrincham area, we have seen it first-hand; a case of it no longer being affordable or worth the time and effort. How do some of these landlords feel now we wonder – might they have stuck it out with a property that had a D or E rating knowing the EPC proposals would be scrapped? It’s a bitter blow for some, the U-turn on the EPC for landlords.

Ultimately the planet loses out

There are no real winners or losers following this latest decision. If landlords have forked out to improve the energy efficiency of their properties, they will have done so at a cost which they need to recoup. And if they haven’t made the changes, they might lose out on tenants who want energy efficiency. For tenants, they either face expensive energy and heating bills or higher rents, whichever type of property they choose to rent. We can only surmise the real loser here is our planet as we take even longer to adjust older homes to more energy efficient ways of working. Or will another government step in to change the plans again? We shall have to wait and see…

Here at Jameson and Partners, property lettings lies at the core of our business. We work with landlords to advertise properties to rent, source appropriate tenants, and even manage lettings on their behalf. We can also offer advice if you’re thinking of becoming a buy-to-let landlord. For more help, advice or to get your rental property on the market, contact our team of professionals today.