Buy to Let Landlords have Already Spent Millions on EPC Rules

Research from Shawbrook Bank shows buy-to-let landlords have spent millions preparing homes for EPC changes that will no longer happen.

While this spending may seem unnecessary given the recent eco u-turn, landlords will benefit from eco-friendly and energy-efficient homes in the long run.

On Thursday, the government reneged on a longstanding EPC commitment. The regulation meant landlords would need rental properties to meet a “C” EPC rating by 2025 for new lets. All properties would need to meet that target by 2028.

The government also went back on other eco policies. For instance, the ban on diesel cars was pushed back to 2035. They also postponed the requirement to replace a gas boiler by 2023. However, they increased the Boiler Upgrade Grant from £5,000 to £7,500.

Over the weekend, the government disbanded their energy efficiency task force. Appointed in March, the task force – chaired by former Natwest chief exec Alison Rose – spearheaded boiler and home insulation upgrades.

However, the task force discovered on Friday that it would be dissolved. Lord Callanan, energy efficiency minister, confirmed in a letter that the task force’s work would be streamlined into other government activities.

A Shawbrook Bank study revealed that around 80% of landlords had already prepared their buy-to-let for the 2025 EPC regulation change. A third of those landlords said their properties already met the minimum EPC requirements, while half said they’d prepared to improve their rating before 2025.

Conversely, 17% of surveyed landlords had yet to make plans to improve their buy-to-let EPC rating, with around 3% claiming to have no knowledge of the former EPC regulations. Property types such as serviced accommodation and student accommodation investment invested heavily in EPC compliance.

Almost half of surveyed landlords shelled out £500 to £20,000 on energy efficiency measures within the last year. The mean average total was £25,148. However, the London property market  landlords spent considerably more, averaging over £37,000.  Learn more about this and more with some of the regeneration areas London has to offer or some of the new homes Liverpool also offers. The buy to let property sector in Liverpool has seen a huge surge and investment in recent years.

Many landlords are worried about property improvement labour costs over the next six months. Meanwhile, 16% of landlords had concerns over the impending EPC regulation changes.

The Shawbrook Bank survey showed that a quarter of landlords prioritised buying new and energy-efficient properties over the next six months.

One rumour suggests that the EPC regulation deadline for new tenancies would move to 2028. 31% of landlords said such a move would give them more time to complete EPC improvements on their properties. Meanwhile, 29% said they intended to continue their energy efficiency plans anyway.

Shawbrook’s Real Estate Managing Director, Emma Cox, had the following to say on the energy efficiency U-turn:

“Scrapping the impending EPC regulations might free up capital in the short term for landlords who haven’t yet invested in improving the energy rating of their properties.

“But while policies shift, climate change is going nowhere, and energy-efficient buildings will remain central to net zero plans.

“Rules might not be changing as soon as 2025, but professional landlords with modern, energy-efficient stock will be in the best position to attract tenants, as well as reduce potential voids, and importantly, be prepared for future legislative change.”

According to another survey, nearly three-quarters of people would prefer to live in an energy-efficient property.

The climate crisis is a very real issue, and people are taking environmental disasters and global warming more seriously.

This should prompt landlords to choose an energy-efficient property. Not only will this appeal to tenants who are conscious of their carbon footprint, but it’ll also help tenants save money in the long run.

The Resolution Foundation think tank suggested the EPC u-turn would disproportionately affect lower-earning tenants.

Landlords with energy-efficient buy-to-let properties would appear more favourable in the eyes of most tenants as they would save money on their energy bills and rest easy knowing their property is more environmentally friendly.

In addition, meeting the previous EPC policy guidelines would also stand you in good stead when the policies come into effect at a later date.

Newer properties in Liverpool, such as ELEMENT – The Quarter and the Gateway, are prioritising energy efficiency and sustainable technologies and are leading the way for a cleaner property environment in the future. Why not take a look at some of the best return on investment ideas for 2023 with our free guide.

RWinvest have created some useful property guides, from the latest Buy to let guide for Leicester to the Stoke on Trent Buy to let guide!

While buy-to-let landlords may need to commit capital to pre-existing properties, new-builds are more likely to meet EPC guidelines, regardless of whether the government pushes back deadlines. As such, these properties will command premium rental costs and potentially result in significant capital growth.