BTL landlords could be left with little choice but to exit the market

Almost two-thirds (59%) of landlords admit they might have to sell up if they were forced to make EPC upgrades, new research shows.

More than a quarter – 28% – of landlords said they were extremely concerned about the costs of upgrading their property and that it could not have come at a worse time.

A third – 34% – said it was quite likely they would sell their property instead of upgrading it one in three -30% – said they will potentially pass the cost of upgrading onto their tenants.

As private landlords await details and updates around the minimum energy efficiency standard (MEES) regulation, the research from Mortgage Advice Bureau shows that almost two-thirds of landlords would consider selling their property due to not being able to afford the changes needed to meet the minimum level.

With an expected deadline of 2028 for landlords to retrofit their properties to a minimum of an EPC C rating, there is a clear need for more clarity regarding the help that is available to landlords.

Currently, landlords must have a minimum energy efficiency rating of an E to be able to let a property out, with exemptions for those properties which would cost more than £3,500 to retrofit to this level. It is expected that the government will announce a similar exemption for the new enhanced level, but with the additional cost involved to go from an EPC of E to C. This exemption is due to be set at £10,000, with the average home expected to cost £4,700 to retrofit to this level.

This leaves many landlords concerned and anxious about how they will afford these changes. According to the research, a quarter – 25% – said it was likely they wouldn’t be able to afford the changes, while a third (34%) said it was quite likely they would sell their property instead of upgrading it.

For others, it seems the potential upgrade bill will be passed onto tenants, with a third – 30% – saying they would do this in the future. A further 30% said they had already passed on bills for other upgrades to tenants.

With many landlords facing a hefty bill and a race against time, a fifth – 21% – of landlords are hoping that more help will become available to combat the cost of energy performance upgrades.

The government has placed a focus on retrofitting and renewable energy, with their recently expired ‘Green Home Grants’ and the newly announced ‘Great British Insulation Scheme’ (formally ECO+) to help improve the performance of the least energy efficient homes. However, there has been little in the way of policies, announcements, or clarity for landlords, leaving them confused about what upgrades will help.

A quarter – 26% – said they are planning on installing a smart meter to help hit a grade C, 25% would install LED lighting, while only 16% have sought the help and advice from a professional tradesperson to understand which changes would benefit them most.

Other, more proven methods to improve EPC ratings were less popular, but are still being considered by landlords. Only 22% would consider installing a new modern boiler, and only a fifth (20%) would consider installing more insulation – a proven way of keeping heat in.

Almost a third (28%) said the cost of upgrading was extremely concerning and couldn’t have come at a worse time for them, considering the cost-of-living and interest rate increases which have squeezed the finances of many landlords. Although they did realise the need for the changes, 20% of those surveyed said it was an unfortunate but necessary spend, even though the cost was a concern. On the other hand, 32% said it was an unwelcome spend and a big worry of theirs.

Ben Thompson, deputy CEO of Mortgage Advice Bureau, said: “The need for more efficient housing is obvious and has had a lot of focus placed on it in recent months. For renters, it means potentially lower utility bills, and for the UK’s climate goals, our leaky housing stock is a big barrier to getting to net-zero.

“However, for landlords, the proposed changes to upgrade to at least a C instead of the current E will mean they face having to foot large retrofitting bills. Our research shows just how confused and worried they are by this. Even if (as rumoured recently) the government delay the proposed deadline to 2028 for all rental properties, it isn’t long to find the money needed for the upgrades. This is especially challenging when considering the recent economic climate, which has seen mortgage rates increase and the cost of everyday items go up and up. There clearly needs to be more advice, guidance, and help for landlords.”


BTL landlords face huge energy efficiency upgrade cost, says agency


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  1. MrManyUnits

    And the majority of Landlords know that’s an impossible task, shortage of contractors and materials coupled with “proposal”. Heat pumps, large pipes and extra large radiators to bring the temperature down, will only lead to mass homelessness amongst those 4.5 million properties that need upgrading.

  2. BillyTheFish

    More doom and gloom for the Lettings sector seeing huge rent increases each year. Is it really so bad we need daily reminders that all landlords are going to sell? If that happened we’d have a housing disaster as it is not exactly a great time to buy property for most people at the moment.
    Why on earth is Govt policy focusing on the significant minority of rental property vs significant majority of owned property? If this is all about reducing emissions and increasing efficiency then surely the latter would make more sense. Or heaven forbid all property at the same time (crazy talk!).

  3. Will2

    When you milk as cash cow dry the baby calf dies.

  4. A W

    “The need for more efficient housing is obvious”… 

    If we took a survey of what would tenants prefer more, a more EPC efficient properties or to pay less rent… I wonder what they would choose.

  5. northernlandlord

    A lot of the PRS stock comprising cheaper houses with the cheapest rents are old and the older a property is the more expensive it is to upgrade to an EPC rating of C. Pre 1919 stock accounts for 19.9% of all property and pre 1919 to 1944 stock accounts for 34.5%. While it is not impossible to upgrade these properties doing so will cost a large percentage of the property value that will not be recovered on resale and will swallow up a couple of years net rent. It is to be hoped that the Government will see sense and take the age of property into account. I would suggest that for pre 1919-1944 properties that E continues to apply and that for 1946-1990 D becomes the standard with C being reserved for properties built after 1990. It seems to me that if landlords are going to leave the PRS they should do it sooner rather than later as I can foresee that given the housing shortage it might get a bit sticky for landlords to evict tenants and extricate themselves in the future. There could be all sorts of hoops to jump through and delays to contend with before you are allowed to sell up. If as a landlord you have not made the EPC upgrade and sell to try to avoid it, who is to say that a special environmental tax won’t be applied at some point to any sale proceeds? So either way you won’t escape.  


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