A recent survey by Foundation Home Loans sheds light on how UK landlords are preparing to address the government’s proposed Energy Performance Certificate (EPC) ‘C’ standard, which aims to improve energy efficiency in rented properties by 2030. Over two-thirds of landlords surveyed revealed they own properties that do not meet the required EPC ‘C’ standard, prompting many to consider how they will comply with the regulations.

Key Survey Findings:

1. Awareness of EPC Regulations:
   • 92% of landlords are aware of the EPC requirements, but only 67% feel they fully understand them. Larger portfolio landlords, especially those with four or more buy-to-let properties, have slightly less understanding (62%) than single-property owners (69%).
2. Landlords’ Strategies for Compliance:
   • 42% of landlords plan to make the necessary upgrades to meet the ‘C’ rating.
   • 24% will only carry out the minimum work required.
   • 14% aim to improve the long-term value of their properties.
   • 34% are considering selling their properties without making any upgrades, while 3% plan to upgrade and then sell.
3. Funding EPC Upgrades:
   • Many landlords are looking to raise rents to cover the cost of the improvements. 41% of landlords plan to increase rents, while 28% will apply for government grants to help finance the upgrades.
   • 12% intend to release equity from their portfolio, and 5% are considering taking out loans or additional mortgage financing.

Impact on Tenants:

With the EPC ‘C’ requirement coming into force, tenants are likely to face higher rents. Landlords are expected to raise rent prices as a means of offsetting the costs of energy-efficiency upgrades. The potential financial strain on landlords has led to calls for more government support to ensure compliance with the new regulations while keeping rents affordable.

Green Mortgage Products:

To assist landlords in meeting these energy-efficiency standards, green mortgage products are seen as a potential solution. Tailored green mortgages could offer favorable terms to landlords who make eco-friendly upgrades to their properties. Foundation Home Loans highlighted the potential for such products to help landlords comply with the new regulations while maintaining the financial viability of their portfolios.

The Bigger Picture:

The journey to achieving the EPC ‘C’ standard presents both opportunities and challenges for landlords, lenders, and tenants alike. While the regulatory changes aim to improve energy efficiency and tackle fuel poverty, they come with financial implications that may lead to higher costs for tenants. As the rental market adjusts, it remains to be seen how landlords, lenders, and the government will balance compliance with affordability.