Landlords say they will prioritise better energy efficiency ratings

A quarter of landlords say they are likely to avoid buying properties with a low energy performance certificate (EPC), according to research by Shawbrook Bank.

Proposed government changes to the Minimum Energy Efficiency Standard are likely to impact buying preferences the survey shows.

Of the 1,000 landlords questioned by the Shawbrook Bank, nearly a third of buy-to-let investors said they would buy a property that already has a C rating or above.

A further 24 per cent said they were more likely to prioritise a property with the potential to reach C or above.

Of the group, 15 per cent said they only buy properties built in the last 20 years, coinciding with separate data showing that houses built before 1940 are unlikely to have an EPC rating of C or above.

In 2020 the government proposed changes to the Minimum Energy Efficiency Standard, stating that landlords may need to reach an EPC rating of C or above by 2025 for all newly rented properties, and 2028 for all rental properties. 

One of the challenges faced with these proposals is that a significant portion of housing stock across the UK was built before 1940 and is therefore unlikely to be C-rated or above.

On average, landlords estimate making the necessary improvements will cost them £5,900 on average.

Emma Cox, managing director of real estate at Shawbrook, says: “It’s concerning to think that a significant proportion of properties, within the private rental sector, could fall out of favour due to poor EPC ratings and significant improvements needing to be made in a short period of time.

“The market has a responsibility to offer landlords more guidance on what the proposed legislation will mean for them, where to start with improvements, and how to sustainably finance the works.

“Proactive landlords, already making changes ahead of the proposed deadline, will be in a strong position for the future, constantly one step ahead of the upcoming changes. 

“While our research showing that most landlords are set to commence improvement works within the coming 14 months, making changes sooner rather than later will limit the risk of supply and labour shortages for landlords as we edge closer to the proposed 2025 deadline.”