Landlords in England are facing a staggering c.£20 billion bill to meet mandatory EPC ratings by 2030. The government has launched a consultation on its plans to set a minimum EPC rating of C for privately rented homes by 2030. For landlords, this consultation marks the start of a countdown to compliance that could come with significant costs and challenges. Here’s what landlords need to know…
There are nearly 4.9 million private rental properties in England with over half 2.58 million (52%) having an EPC rating below C. According to government research, the average cost to upgrade a property to an EPC rating of C is between £6,100 and £6,800. However, for the average buy-to-let property, it is thought this figure is likely to be closer to £8,000 meaning landlords could face a collective bill of nearly £19.8 billion to meet the new standard.
London landlords face the highest costs due to both the volume of rental properties (1.2 million) and higher average upgrade expenses, which are estimated to be £9,000 per property.
Furthermore, the government is proposing increasing the maximum cap for landlords to raise the ratings from E to C from £3,500 to £15,000 per property with an affordability exemption, which would lower the cost cap to £10,000 for properties with lower rents or council tax bands.
42 per cent of landlords unaware of proposals survey finds
A survey commissioned by epIMS found that 40 per cent of landlords were unaware of the consultation and 42 per cent were not aware that a C rating would soon be required. Additionally, over a quarter (27%) did not know the current EPC rating of their properties.
Understanding EPC ratings
According to the research, many landlords (32%) are also unaware that EPC ratings are determined by a points-based system. For example, a rating of C is achieved with 69-80 SAP points, while a D rating scores between 55-68 points. This means that some properties could reach a C rating with relatively small improvements if they are on the edge of the scoring band.
Even more key is for landlords to know that it may be beneficial to take action now to upgrade their buy-to-let properties as rental properties that are already rated A-C before the introduction of new Energy Performance Certificates would be considered compliant until they expire.
Cost vs. savings of EPC upgrades
epIMS suggests that upgrading an average property with a D rating, which has an annual energy bill of £2,513, to a C could reduce costs by 29 per cent (£717 per year). Moving from an E to a C rating could cut bills by 48 per cent (£1,685 annually) and upgrading from a G to a C could save up to 70 per cent (£4,240 annually) totalling over £21,000 in savings over five years.
COO of epIMS, Craig Cooper, commented: “The average landlord is thought to have eight properties within their portfolio and with the average cost to bring a sub-C rated home up to compliance coming in at £8,000, that’s a potential required investment cost of £64,000 over the next five years in order to ensure their portfolio is compliant.
However, what many landlords don’t realise is that a C rating could be well within their reach by making just a few small improvements to their rental properties.”
Easy ways to improve your EPC Score
For properties close to reaching a higher EPC band, small upgrades can make a difference, such as:
- Hot water cylinder insulation: +1.7 points
- Cylinder thermostat: +2.4 points
- Low energy lighting: +1.1 points
What should landlords do now?
epIMS suggests that landlords should:
- Determine the current EPC rating of each property
- Focus on changes that offer the highest points for the cost
- Engage accredited assessors to identify cost-effective upgrades
- Stay informed by following updates on the government consultation and future regulations
This consultation is a critical reminder to landlords that the clock is ticking on mandatory changes. Acting now not only ensures compliance but can also deliver long-term savings and add value and energy efficiencies to your property portfolios.
