Landlords across England and Wales face a £26bn bill to meet new energy efficiency rules with millions of rental homes still below the government’s proposed minimum standard.
Analysis from insurer Just Landlords estimates that 3.38 million private rented properties do not currently meet the planned EPC Band C requirement due to come into force in October 2030 under the Warm Homes Plan.
The average cost of upgrading a non-compliant property is put at £7,633 but in some rural and northern areas costs can exceed £12,000, raising concerns about the financial viability of buy-to-let investments.
The report compares upgrade costs with rental income and finds landlords in some parts of the country could face bills worth more than a year’s rent.
REPAIR-TO-RENT
Powys has the highest repair-to-rent ratio, with upgrade costs equal to 148% of annual rental income. Hartlepool, the Isle of Anglesey, Gwynedd and Northumberland also rank among the most expensive areas for retrofit work.
Meanwhile high rents in London mean landlords can often recover upgrade costs far more quickly, with Kensington and Chelsea, Westminster and Islington among the lowest ratios in the country.
COMPLIANCE LEVELS
Urban areas show the highest proportion of properties already meeting EPC targets, while coastal and rural locations have the greatest number needing major work.
In some regions more than half of homes are rated E, F or G, meaning expensive structural improvements such as insulation upgrades or heat pumps may be required.
Kimberley Kealing, Managing Director of Just Landlords, says: “While the drive towards more energy-efficient homes is a vital step towards Net Zero, it involves a massive financial burden for landlords.
“Shockingly, our data reveals that for many landlords, the cost of renovations could exceed their annual rental income by nearly 50%. Without significant support, this ‘green tax’ could leave landlords questioning the financial viability of their properties.”
RENOVATION RISK
She adds: “From an insurance perspective, this national renovation project carries its own risk.
“Major works can increase a property’s risk profile, with a higher chance of claims related to things like structural damage, escape of water and fire.
“Landlords in these ‘deep retrofit’ areas must ensure their coverage is tailored for the scale of works being undertaken.”
