Landlords could face bans on renting out their property if they do not meet EPC C targets by 2030, claims the NRLA.
Ed Miliband, energy security and net zero secretary, told the House of Commons that landlords must meet energy efficiency targets by 2030 but gave no further detail on how this will be achieved.
The NRLA is urging the Labour government to provide clarity on funding for energy efficiency improvements.
The former Prime Minister Rishi Sunak scrapped EPC targets which would have required landlords to ensure their rental property had a minimum EPC C rating. The mooted deadline was 2025 for new tenancies, and by 2028 for all tenancies.
Mandatory targets will help those in fuel poverty
Mr Miliband told the Commons “one thing that this government will do that the last government did not, is demand that landlords raise the standard of their accommodation to a proper energy performance certificate standard C by 2030.”
Mr Miliband claims the mandatory targets will support more than three million people in the country facing fuel poverty.
Most landlords are not property tycoons
However, the NRLA warns without a proper plan, many smaller landlords will struggle to meet the new requirements.
NRLA deputy director of campaigns, policy and public affairs Meera Chindooroy said “in the midst of a housing and cost of living crisis it is vital that we ensure there is a healthy supply of quality homes to let in the places where people want to live. Creating energy efficient homes is a win/win – tenants have cheaper bills, and the property is more marketable as a result. However, the costs to get some homes, typically older properties, to a C grade is, quite simply prohibitive for smaller landlords. Our research shows that, contrary to popular opinion most landlords are not property tycoons with money to spare, and with improvements potentially costing tens of thousands of pounds it is essential that the government comes up with a plan that will work across the country.”
Energy efficiency improvements capped at £10,000
The NRLA is asking the government for more information as to how properties will be assessed and details of any exemptions and spending caps, as well as whether funding or other support will be available to landlords when it comes to making improvements.
Under the previous government’s proposals, spending on energy efficiency improvements was capped at £10,000. However, the NRLA points out that this cap could have varying impacts on landlords depending on their location.
For example, £10,000 might be more manageable for a landlord with properties in London compared to one with properties in the North East.
EPC ratings rise but fewer certificates are being lodged
There has been a dip in new energy performance certificates (EPCs), suggested falling home sales and property supply. Government data shows 458,000 EPCs were lodged on the Register for both domestic and non-domestic properties in England and Wales during the second quarter of 2024, a 6% annual drop.
Meanwhile, the total number of EPCs lodged for new dwellings in England and Wales had a 5% decrease to 56,000.
In April to June 2024, 357,000 EPCs were lodged for the sale or let of existing dwellings - a 3% decrease, while 55,000 were lodged for new dwellings, down 5%. In the year to June 2024, 1,336,000 EPCs for existing dwellings were lodged on the register in England, a 5% annual decrease, the figures show.
EPCs for new dwellings had a 5% decrease to 230,000.
The region with the largest increase in EPCs lodged for new dwellings compared to the same quarter in 2023 was in London (13%), while the largest decrease was in East of England where the figure was down 17%.
In Wales, there were 19,000 EPCs lodged in total and 18,000 for sales or lets – down 8% annually.
In the 12 months to June 2024 in Wales, 78,000 domestic EPCs were lodged, which is a 3% decrease on the previous 12 months. In some positive news, from April to June 2024, 87% of new properties in England given an A or B rating, an increase from 86% in the same quarter in 2023, suggesting homes are at least becoming more energy efficient.
Preferential rates for buy to let borrowers with good EPCs
Paragon Bank is offering four new limited edition buy to let mortgages, with two products suitable for landlords with three or fewer mortgaged buy to let properties, and two corresponding options for those with four or more buy to let properties.
Available on single self-contained properties at up to 65% loan-to-value, the products come with a £2,995 fee.
Rates start at 5.45% for the purchase or remortgage of properties with EPC ratings of A-C. Homes assessed to be EPC D or E-rated can be financed with rates at 5.50%.
Interest coverage ratios are calculated in line with initial rates and the products are available for individual and limited company applications in England, Scotland and Wales.
Louisa Sedgwick, Mortgages Commercial Director at Paragon Bank, says “we’ve launched these limited-edition products to provide landlords with more choice and offer solutions that suit a broader spectrum of customer. Our expertise means that we’re sometimes seen as an HMO or multi-unit block lender. While it is true that we do have lots of experience in this space and work with established landlords, we also support newer entrants to the market who may be growing their portfolios with more simple propositions, such as single self-contained properties. Offered at a lower loan-to-value of 65%, these products will be particularly appealing to those that can put down a slightly larger deposit to benefit from lower rates.”