Landlords will be celebrating after the government announced it will scrap the energy performance certificate (EPC) targets for homes.
Prime Minister Rishi Sunak unveiled the plan – along with a ban on binning gas boilers – during a televised press conference from Downing Street and tenants will be celebrating too since Mr Sunak acknowledged that the cost of carrying out EPC improvements to meet a minimum rating of C would impact the rent they pay.
He said that "property owners would not now be forced to make expensive upgrades in just two years’ time and the cost of energy improvements could be around £8,000."
‘Those plans will be scrapped’
The prime minister said “those plans will be scrapped and while we will continue to subsidise energy efficiency, we will never force any household to do it.”
The chief executive of the National Residential Landlords Association (NRLA), Ben Beadle, said “the NRLA wants to see all properties as energy efficient as possible. However, the uncertainty surrounding energy efficiency policy has been hugely damaging to the supply of rented properties. Landlords are struggling to make investment decisions without a clear idea of the Government’s direction of travel. It is welcome that landlords will not be required to invest substantial sums of money during a cost-of-living crisis when many are themselves struggling financially. However, ministers need to use the space they are creating to develop a full plan that supports the rental market to make the energy efficiency improvements we all want to see. This must include appropriate financial support and reform of the tax system which currently fails to support investment in energy efficiency measures.”
Decision to bin EPC ratings for rented homes
However, the decision to bin EPC ratings for rented homes has been slammed by Dan Wilson Craw, the deputy chief executive of Generation Rent who said “cancelling higher standards for rented homes is a colossal error by the government. Leaving the impact on the climate to one side, it makes the cost-of-living crisis worse and damages renters’ health. One in four private renters lives in fuel poverty and, without targets for landlords to improve their properties, they face many more years of unaffordable bills.Energy efficiency is also an essential part of a home’s quality. Backtracking leaves the government’s levelling up mission to halve the number of non-decent rented homes in shreds. Both tenants and landlords need support to upgrade private rented homes, and the Prime Minister recognised that ‘big government grants’ help make it affordable.
But without higher standards, landlords have no reason to accept tenants’ requests for improvements. The government’s dithering over these standards in recent years has led to the housing sector being unprepared for the original 2025 deadline. Ditching it completely is both cruel and out of proportion to what the Prime Minister wants to achieve.”
Landlords and homeowners will also have more time to make the transition to heat pumps, and households will only have to make the switch when they’re changing their boiler – and then not until 2035.
Mr Sunak says that gas boilers will not have to be ‘ripped out’ to meet targets and that heat pumps will need to be made cheaper, so they don’t impose high costs on families.
There will be an exemption will be introduced for some households and the boiler upgrade scheme will be increased by 50% to £7,500.
Sunak’s betrayal: How the PM stabbed landlords in the back with his EPC U-turn
Rishi Sunak has once again shown his true colours as a Prime Minister who does not care about the interests of landlords and the private rented sector.
In a shocking move, he has scrapped the plans to enforce minimum Energy Performance Certificate (EPC) ratings for rented homes, which would have required landlords to upgrade their properties to a C rating. To me, the EPC rules should either not have been introduced without a firm and achievable deadline – an insinuated deadline created lots of confusion among landlords – or the government shouldn’t have bothered with the notion that only rented homes needed energy improvements.
The PM’s decision is a slap in the face for thousands of landlords who have already invested in improving the energy efficiency of their properties, in anticipation of the new regulations.
Some landlords have spent thousands of pounds on installing insulation, double glazing, new boilers and renewable energy sources and let’s not forget that thousands of landlords will have sold their properties – some will have offloaded at a loss – because they could not afford the necessary EPC improvements.
Upgrading properties to meet the EPC standards
For those landlords who have already invested in upgrading their properties to meet the EPC standards, Sunak’s decision is a bitter blow.
They have spent their hard-earned money on making their properties more energy-efficient, and now they are being told that it was all for nothing.
This is a betrayal of their trust, and it will leave many landlords feeling resentful. However, I accept that without EPC criteria, there is no guarantee that landlords will invest in making their properties more energy efficient.Why can’t we have a staged approach? Why couldn’t we move to a D rating, with exemptions for listed homes, and then a few years later to a C? (And then, I’m guessing, the climate crisis hoaxers would demand an A rating…).
‘Landlord’s EPC deadline: Does anyone else feel conned?’
But we can’t pretend that something like this was not in the offing – I raised the issue when I asked: ‘Landlord’s EPC deadline: Does anyone else feel conned?‘
This is when the landlord’s friend Michael Gove hinted that too much was being asked of landlords, and the costs were too high. Now, Sunak claims that he made this U-turn because he felt the costs involved were too much at a time when many people are facing financial difficulties.
He also said that he wanted to have a more honest and pragmatic debate about how to achieve Net Zero emissions.
But these are just empty words from a Prime Minister who has no vision or leadership. Remember, this is a leader who wasn’t voted into power by us or even the Conservative Party members. He’s a placeman for the Parliamentary loons running (ruining?) this country.
Landlords and landlord organisations have been asking for a firm deadline for the EPC regulations for years now, so we had something to work towards.
It didn’t come.
Necessary to help landlords and tenants
I’ve also got issues with Sunak’s argument that scrapping the EPC criteria is necessary to help landlords and tenants during the cost-of-living crisis.
This argument is flawed because scrapping the EPC ratings will not help landlords in the long term.
In fact, it will probably make it more difficult to rent out homes in the future since tenants will want to live in energy-efficient homes that are cheaper to heat.
Landlords who do not invest in making their properties more energy-efficient will find it difficult to attract tenants.
Indeed, we saw this week that landlord investors are unwilling to buy a home that doesn’t have a C rating. This is the direction of travel, whether we like it or not.
Landlords who have improved their EPC rating
Sunak is not only betraying landlords but also tenants because landlords who have improved their EPC rating have had to put rents up. Sunak has belatedly acknowledged this.
This is in a ‘cost-of-living’ crisis.
Now Sunak says he is still committed to meeting the 2050 Net Zero target.
What does this mean? What can we expect as landlords?
Landlords deserve better than this.
We also deserve a Prime Minister who respects our contribution to the housing market and supports us to make our properties greener and more comfortable.
Will landlords vote Conservative at the next election?
After this debacle, will landlords vote Conservative at the next election? The answer will be Yes because the prospect of Labour getting in (which I don’t for a second believe they will) means the EPC regulations will be back on the agenda, along with other draconian legislation aimed at wiping out those nasty landlords in the UK.
Who will fight our corner? Who will stand up and explain that without our investment efforts and time spent providing homes, the country needs us?
If we are to improve EPC ratings in the future, make it for ALL homes not just those in the private rented sector. Afterall, the ‘climate crisis’ affects everyone in the country and not just private sector tenants – does it not?
But, just in case, here’s a helpful message to a future government: Please reinstate section 24 so we have a chance of making a profit and commit to helping us provide the desperately needed warm homes that tenants need.
Majority of landlords won’t buy a property below EPC C
More than 71% of landlords are unlikely to buy a property which has an EPC rating of less than C, according to new data. The study by Foundation Home Loans and BVA BDRC, reveals the more properties a landlord has within their portfolio, the less likely they are to buy below a C rating.
A staggering 74% of landlords with six to 10 properties say they would not buy a property with an EPC rating between D-G.
Looming changes to EPC rules
Though the plans have not been made into law, ministers have previously proposed that by April 2025, newly rented properties in England and Wales will need to meet a minimum EPC standard of C – tougher than the current E standard.
The regulation is also slated to apply to existing tenancies from 2028. Nearly three-quarters of landlords (71%) said they were fully aware of the looming changes to EPC rules while 24% were aware something is changing and just 4% had no awareness of the rule changes.
Just 18% of landlords polled said they didn’t think EPC rating would be a factor in their buying decisions.
Landlords to fund EPC work using savings
In terms of the work landlords intended to carry out on below level C properties, 37% said they would carry out the works at the minimum cost required to comply, while nearly one in five (20%) said they would carry out works to maximise the long-term value of their property.
However, a quarter said they would not carry out any works and would either sell the property or not re-let it. Landlords anticipate it will cost just over £10k per property to carry out the works required to reach EPC level C, with this rising to over £11.5k for those with larger portfolio sizes.
According to the survey, more than half of landlords (57%) said they would fund the works via savings, 33% said they would increase the rent and 18% would access government grants or funding. A further 19% said they would either take a further advance from their lender or take out a loan (down from 20%).
Landlords are thinking seriously about their existing portfolios
Grant Hendry, director of sales at Foundation Home Loans, said “while we still might be waiting for certainty and clarity over when the government is likely to introduce its minimum EPC level legislation for the private rental sector, it’s clear from this research that landlords are aware of what is likely to be coming. Landlords are thinking seriously about their existing portfolios, how they might fund improvements, and what their plans might be when this is introduced. It’s not suprising that landlords want to buy properties with higher EPC ratings. With landlords anticipating a cost of over £10k per property in order to improve its EPC level to C, it is perhaps not surprising they are disinclined to buy properties already below this. In effect, they are future-proofing their portfolios by opting only to buy C and above properties now, while they will presumably focus on those properties within their portfolio which are not currently at this level. It remains somewhat surprising that the majority of landlords are saying they will fund the work via savings, and we wonder whether when push comes to shove, they will really want to do this or they will seek instead to use finance.”
Where would tenants go when EPC work is carried out on properties?
The proposals to upgrade all properties to an EPC ‘C’ rating, where are the tenants of a two-bed back-to-back going to live whilst the work is carried out? Don’t forget that pets are as important as kids in many families.
Where will the mum/dad go during the day when the property is full of workmen and debris? It could take several weeks per property.
Where will a stay-at-home parent with infants go? How will provide food be provided with no kitchen? The one who puts food on the table comes home to a freezing cold house? No bathroom for days and days? No CH?
West Yorkshire has a huge number of these properties. We have several. We’re really good, experienced landlords but I’ve spent hours trying to fathom this out. There is no solution for most of my tenants. Has the person – Gove? – who came up with the policy ever even been in a similar property? Doubtful. Perhaps he’d offer up a few rooms in one of his no doubt multi-roomed mansions to accommodate some of my tenants whilst the work is carried out. Doubtful again.
I’ve gone through all of our properties one by one. All of our properties have gas central heating (GCH). The next substantial step would be retro-fitting wall insulation in some plus roof insulation in those with loft bedrooms. Nearly all have gas boilers in their kitchen or bathroom to vent through an exterior wall. Anyone familiar with properties such as ours would know you’d have to dismantle the entire kitchen and bathroom to get to the wall to be insulated.
The entire GCH system would have to be reinstalled as would the kitchen and bathroom plus much of the water supply and waste removal. The trouble is, some would ‘lose’ the kitchen. Some would ‘lose’ the bathroom, some both. The reason being there isn’t enough space for boilers, bathrooms and kitchens to be reinstalled in front of the insulation. All the sockets re-sited. New skirting boards, decoration.
How do you square that circle?
There isn’t the workforce to carry out all of this work. All of the suppliers of insulation materials stress insulation must be expertly installed or at least by competent professionals. Twenty years of experience has meant I know I need several of all types of professionals. Roofers – 6; gas safe plumbers similar; electricians 8. We have mutual trust.
Apart from emergencies, I sometimes have to join the queue. A lack of competent labour available to install insulation will see every cowboy in the land crawling out of the woodwork and charging more money than Elvis earned to do a rubbish job. Waste of time and money.
Tenants will be worse off financially. I’ll have to increase rents by around £1000 pa. Put that against a paltry saving in gas and electricity even at todays prices when the general feeling is that energy prices could well fall hence even lower ‘savings’. If the government want to save folk money all they need to do is to stop pandering to the greens and remove ‘green’ levies.
Then, how are you going to police the rogue EPC providers who will be abundant, no doubt? As usual, the ones who work to the legislation will suffer whilst the rest will get away with a dodgy EPC cert. Come to think of it, I think that’s what I need……