Around 80 per cent of landlords have already completed energy efficiency works

The majority of landlords, 80 per cent, have already done some remedial works on properties in response to upcoming energy efficiency requirements, according to a survey.

According to Foundation Home Loans, which surveyed around 683 landlords, just over half had carried out works at the minimum cost required to comply.

Around two in five said they had carried out works to maximise the long-term value of their property.

The report said the number of landlords who would not carry out works, did not seek to sell or not re-let property had fallen quarter-on-quarter from 20 per cent to 13 per cent.

Over three quarters of landlords said they would use savings to carry out work, up from 62 per cent in the prior quarter.

Around 26 per cent said they would increase rent and 10 per cent would take out a loan, in-line with previous figures.

Only 10 per cent said they would take out a mortgage, which is slightly up from eight per cent in the previous quarter.

Approximately 19 per cent said they would seek government grant or funding, 10 per cent would take up a mortgage.

Nearly 19 per cent said they owned one or more properties with an EPC rating of E or lower, but 78 per cent said all their properties were above an E rating.

Only three per cent said they didn’t know the EPC rating of any of their properties.

Legislation is still to be confirmed, along with timings, but 85 per cent of those surveyed were aware and understood what was being proposed. This is up from 65 per cent previously.

Around 12 per cent said they were aware but didn’t understand it, a fall from 25 per cent in the prior quarter and only three per cent were not aware at all, a decrease from nine per cent previously.

George Gee, managing director for commercial at Foundation Home Loans, said the figures showed there was a “clear intention” from landlords to meet legislation and a “positive intent” to “staying invested and not selling up if the property is not currently at the required level”.

He added: “Awareness and understanding of the EPC requirements is on the up, and I suspect this has much to do with the concerted information campaign our industry has been involved with, drawing attention to this issue and what landlords may have to do for those properties that do not currently make the EPC grade.”

Gee said it was interesting that the predominant funding method was savings but warned that some landlords may need to raise additional funds through refinancing to meet requirements.

“If that is the case, and we have a large number of portfolio landlords needing to fund works across a much broader range of properties, then it may well be they look to their mortgage and/or other loans in order to meet these costs,” he noted.

Gee said it was “important” that conversations between landlords and advisers did not stop.

If, as the rumour mill suggests, the measures will be total EPC level C and above compliance by 2028, it may seem like too far away to talk about anything deep and meaningful.

“But, the obvious point to make here is if you are having finance conversations now, and if there’s an opportunity to carry out work early and secure the finance to cover perhaps an entire portfolio now, then there’s no need to hold back and wait,” he commented.

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