The UK government has taken a major step toward enforcing stricter energy efficiency standards for privately rented homes, launching an official consultation on plans to mandate a minimum EPC rating of C by 2030.
With over half of private rental properties currently failing to meet this benchmark, landlords face a staggering £19.8 billion bill to bring their properties up to standard.
According to research from epIMS, an estimated 2.58 million private rental properties in England – 52% of the total – have an EPC rating below C. Government data suggests the average cost of upgrading a property to a C rating is £8,000 but regional disparities mean some landlords will pay significantly more.
London landlords are expected to bear the heaviest financial burden. With 1.2 million private rental homes – double the number of any other region – bringing the capital’s below-standard properties up to code will cost an estimated £4.7 billion. The average cost per property in London is £9,000, higher than the national average.
FINANCIAL IMPLICATIONS
Despite the financial implications, a striking number of landlords remain in the dark. A survey commissioned by epIMS found that four out of 10 (40%) of landlords were unaware the government’s consultation was even taking place while a similar number (42%) did not know that the minimum EPC standard would soon be raised to a C rating.
Over a quarter of landlords admitted they didn’t even know the current EPC ratings of their own rental properties.
POINTS SYSTEM
The complexity of EPC scoring also adds to the confusion. While ratings range from A to G, a lesser-known numerical points system determines a property’s exact placement.
For example, a score of 69 to 80 points qualifies as a C, while a D rating falls just below this threshold. However around a third of landlords (32%) were unaware of this system, and a staggering 65% didn’t know how many points were needed for a C rating.
Many landlords are reluctant to take action and appear to be waiting until the last possible moment.
Just 15% plan to make energy efficiency upgrades within the next 12 months, while 11% intend to do so within four years.
The overwhelming majority (75%) say they will wait until the 2030 deadline approaches. Cost remains the biggest barrier, followed by uncertainty over which improvements will have the biggest impact on EPC scores.
ENERGY EFFICIENCY GAP
The energy efficiency gap is particularly stark between older and newer properties.
While nearly 83% of homes built after 1990 already meet EPC C standards, less than 39% of pre-1990 properties have achieved this rating.
The financial benefits of upgrading are significant. Moving from a D to a C rating could slash energy bills by £717 per year, a 29% reduction. An upgrade from an E to a C would cut costs by £1,685 annually, a 48% savings.
Landlords with F-rated properties could reduce tenants’ energy bills by £2,838 per year, a 61% savings. Those with the lowest G-rated homes stand to save £4,240 per year, a staggering 70% reduction, equating to more than £21,000 in savings over five years.
LANDLORD EXIT
Craig Cooper, epIMS Chief Operating Officer, warns that the costs could be substantial, particularly for portfolio landlords.
He says: “It’s estimated that over 2.5m privately rented properties currently hold an EPC rating of below a C and so the government’s intention to make a C rating mandatory by 2030 will have a notable impact on the current rental market landscape.
“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.”
RENTAL CRISIS
He adds: “The worry is that forcing a mandatory EPC C rating on the nation’s landlords could cause more to exit the sector, exacerbating the current rental crisis in the process.
“However, what many landlords don’t realise is that an EPC rating is actually compiled using a points based system and so achieving a C rating could be well within their reach by making just a few small improvements to their rental properties.
“For example, a score of between 92-100 SAP points gives a rating of A, 81-91 points gives a rating of B, and 69-80 points gives a rating of C.
“This is important knowledge for landlords because it means that a property with a rating of D could be just one point, and therefore one minor improvement, away from upgrading to a C.”
COST EFFECTIVE
But he says: “The good news is that there are a raft of smaller, more cost-effective changes that can be made to a property which are likely to boost an EPC rating, such as installing PV panels over internal or external wall insulation.
“For those who are looking to meet that all-important C requirement, accredited energy assessors are best qualified to advise on what will and won’t work, to avoid wasting money on costly improvements.”
