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Landlords in the dark over the EPC rule change

  • 15% of landlords surveyed have no knowledge of the upcoming changes to EPC rules
  • Properties risk becoming ‘unrentable’ if landlords do not make necessary changes
  • More than a third (36%) of landlords say their rentals were built pre-1940
  • 4 in 10 landlords say their London properties were built pre-1940, similarly in the South West, Scotland and Wales

1 in 7 (15%) landlords surveyed have no knowledge of the upcoming legislative changes to the Energy Performance Certificate (EPC), according to new research from Shawbrook Bank.

From 2025, all newly rented properties will be required to have an EPC rating of C or above. Currently properties only require an EPC rating of ‘E’ or above. Existing tenancies will have until 2028 to comply with the new rule changes.

As a result, millions of properties risk potentially being declared ‘unrentable’ and subsequently ‘unsellable’ or ‘unmortgageable’ due to landlords being uninformed about what the changes will mean for current and prospective tenancies.

Landlords currently unaware of the level of work needed on their property, or properties, could be risking a loss in income until all necessary work is carried out. In severe cases, where a substantial amount of work needs to be done to improve a property’s EPC rating, landlords could find themselves unable to secure appropriate financial support to carry out the works. A quarter (25%) of landlords surveyed said they had little to no knowledge of the forthcoming changes, with long-time landlords – those who have been renting out properties for over 10 years – found to be less aware of the changes and what impact this could have on their properties.

With a large proportion (36%) of landlords with properties built pre-1940, Shawbrook’s analysis suggests that a significant number of landlords will be required to make changes.

Delving deeper into what this means on a regional level, four in 10 landlords say that their properties in London were built prior to 1940, with a similar picture in the South West, Scotland and Wales. Victorian properties – a popular property type in historical cities such as Bath and London – make up 13% of private rental housing stock nationally, according to landlords.

Emma Cox, Sales Director at Shawbrook Bank, comments: “The true extent of what this legislation could mean for the market has not yet been properly realised. Inaction could see a considerable percentage of the private rental sector declared unrentable or unsellable within a matter of years if landlords don’t take important steps now.

“Making changes to improve a property’s energy efficiency rating will help to improve the overall energy efficiency of the UK housing stock and to assist the government in meeting the ambitious net-carbon zero targets set out earlier this year. But on a more direct level, making the improvements ahead of the impending 2025 deadline will ensure that properties remain commercially viable for the short and long term for landlords. Putting off making necessary changes could leave landlords exposed to extended void periods when their property can’t be rented out while works are being completed.

“Mortgage lenders, and key players in the market, have a big role to play in supporting landlords by helping them to understand the new legislation, the potential impact this could cause and how to take action, if required. Our research indicates a clear gap in landlord’s understanding of how the changes will impact them and their current yields. As well as these risks to landlords,, renters may also be put in an even worse position as they compete for a smaller number of properties that are rated C or above after the 2025 deadline.”

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