As part of the Prime Minister’s upheaval of sustainability targets over the last week, the much anticipated EPC regulations have been scrapped.  Until this week, it was scheduled that by 2025 all new tenancy agreements must have an EPC rating of C or better. By 2028, all tenancies - new or existing - were expected to meet this EPC minimum. In preparation for these changes, many landlords have started to invest in energy efficient upgrades, as stated in their EPC reports, to improve their ratings and ensure they are compliant by 2025. However, in a move that surprised landlords,, Rishi Sunak has now reversed these targets, stating that “some property owners would have been forced to make expensive upgrades in just two years' time. That’s just wrong. So those plans will be scrapped and while we will continue to subsidise energy efficiency, we’ll never force any household to do it."

Does This Bode Well For Landlords?

Sunak’s reversal of these targets has been met with mixed reactions. On one hand, landlords will be under less pressure to invest in expensive upgrades, thereby saving them money in the short term and potentially allowing them to invest in other areas. This could also have a positive impact on tenants, as landlords may be able to complete other improvements and may be less likely to increase rents in order to fund these EPC upgrades.  The National Residential Landlords Association has been requesting a more considered approach to EPC regulations for years, suggesting that this ‘one size fits all’ target that requires an EPC score of C is not as attainable to some landlords as others. Many have also stated that landlords have begun to exit the market and offload their assets as a result of mounting pressures from the government. Research carried out by the Mortgage Advice Bureau found that as many as two thirds of landlords were considering selling their properties in response to these EPC requirements. As such, many landlords will breathe a sigh of relief that these targets have been abandoned. On the other hand, Sunak’s political rivals have criticised his unwillingness to adhere to his own policies, stating that the environment will suffer as a result. Many also worry that should Sunak lose the next election, his replacement will reimplement the EPC targets that he has just scrapped, creating further uncertainty for landlords and putting additional pressure on them to keep up to date with ever-changing compliance.  This isn’t to mention the frustration that will surely be felt by property owners that have already paid for property upgrades. Even though these energy efficient measures will likely save landlords in the long run, the large upfront cost of these upgrades has put financial pressure on many landlords. The changes in EPC targets may well stay a raft of activity in the immediate term but it’s well worth noting that tenants and landlords alike are becoming increasingly aware of and in tune with sustainability and energy efficiency measures. Recent research from Dataloft showed that 78 per cent of renters considered the EPC important when renting a property and a similar Rightmove report found that one in five (19%) of tenants say that potential energy bills and the eco credentials of a property will be a “major factor” when choosing a home.

Stay In The Loop With Centrick

Here at Centrick, we fully support the move towards a greener property market that benefits landlords, tenants and the environment. However, we understand that many landlords will feel frustration regarding the sudden changes made by the government to EPC regulations. We aim to keep our clients up to date with any changes - be sure to check out our Landlord Resources hub {change resource in insight} to stay up to date with the latest buy-to-let news, or fill out the form below to speak to a member of our team.