13
Apr
EPC Changes
EPC changes are due to arrive for rented properties, though not
confirmed, the intention and talks are there. The proposed changes
are that by 2025, properties with new rental tenancies should have
an EPC rating of C. For existing tenancies, this has been extended
to 2028.
The target of net zero by 2050 is the driving force behind this
decision. However rental properties only make up a portion of the
property stock in the UK. In 2021 according to Statista, the share
of households occupied by private renters in England hit 18.5%,
which is lower than the year before. This 18.5% of households in
real figures is 4.4 million households. While it’s a big
number, its still under a fifth of all resi properties in England
alone.
The new regulations could be off-putting for many landlords who
own older properties; the cost to bring them up to regulation may
not be worth the hassle in their eyes. A survey was conducted by
The Mortgage Works and found that landlords that fell into this
category felt they would not be able to complete the works
necessary to meet these standards. This could mean landlords
selling their properties which wouldn’t necessarily be picked
up by other investors but rather homeowners, decreasing the number
of rentals available. This means by consequence, the number of
properties that are subject to stricter EPC ratings to help towards
the net zero situation will reduce, as private residential
properties are not subject to mandatory EPC ratings.
Of course none of this is certain but it is an area of potential
twists and turns with stricter regulations putting people off
rather than encouraging. After all property investing is a business
from the point of view of the landlord. Alongside the tax changes
of section 24, the profit margins are being squeezed yet again with
these new regulations. Though the EPC regulations are coming from a
place of genuine need and concern, it might be having the opposite
effect and driving the number of rental properties down. This has
already happened in fact, from 2017 the number of rental properties
in England have decreased year on year. Coincidentally 2017 was
when the section 24 tax changes were announced. Instead of taking
the hit, some landlords probably just sold which has reduced the
number of rental properties available. Difficult to say
conclusively whether these two events are linked, but potential is
there.
Time will tell whether the new regulations will have the effect
they are meant to.