13 Apr

EPC Changes

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.

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