UK landlords are facing a deadline of 2028 to get their homes up to an Energy Performance Rating (EPC) rating of C or above. Those who do not comply face a potential fine of £30,000. It is already illegal to let out a property that falls into the two lowest bands of F and G.
However, if a landlord can prove that it would cost more than £10,000 to bring a property up to a C rating, they can apply for an exemption from the rules. It is estimated that around 65% are currently in band D or below, so there are fears that the change in rules will prompt many landlords to exit the market at a time when there is already a shortage of rental stock.
A recent report by the property portal Rightmove has suggested that better incentives are needed to encourage landlords to make improvements, because currently they are considered to be too expensive. Measures such as loft insulation and cavity wall insulation or replacing old boilers can cost thousands of pounds.
According to recent research, the costs of making such improvements may not be worth the return on investment for some landlords, particularly those in areas where property prices are cheaper, such as the north east. Some commenters have pointed out that landlords in London where homes are significantly more expensive have a financial advantage.
Tim Bannister of Rightmove commented: “It’s clear that the current incentives aren’t yet big enough to make people sit up and take notice, and even the incentives that do exist aren’t easy to find out about.”
“The benefit of making green improvements can be seen in the overall premium that a seller can command. Of course, improvements that make a home more energy efficient could also mean the condition improves, such as installing new windows, and so owners will be weighing up the cost of improvements versus the return they can get when they come to sell.”
“But the end result of making improvements is not just a refurbished home worth more money, it’s also a greener home.”
“In order to shift the demand to greener homes, incentivisation and education is key. The ‘price of cosy’, or a better insulated home, is hard to quantify until people see how it can change how they live for the better, and they need to be able to afford it.”
Suggestions for incentives to make energy performance improvements include grants or tax rebates for green technology such as solar panels, mortgage-related incentives, stamp duty rebates if improvements are made within a few years of purchase, and the introduction of more innovative energy efficient technologies.
Looking for letting agents in Hackney? Please get in touch with us today.