At present, domestic private rental properties must be an energy efficiency Energy Performance Certificate (EPC) of E or above. However, proposed changes for 2025 will require all newly rented properties to have a certification rating of C or above, with existing tenancies needing to comply by 2028.

Landlords are estimating that renovations needed to get up to code will not come cheap. While there is a wide spectrum of costs, landlords that have properties below the EPC rating of C, estimate it will take an average of £10,400 per property to get them up to standard. Nearly half (47%) say it will take £5,000 or less per property.

The way in which landlords will fund these renovations will be mainly through savings, with seven in ten (71%) saying they will dip into their savings to pay for upgrades, additionally, one quarter (25%) will do so through Government funding, 23% by putting up rent, and 11% by seeking a further advance from their mortgage lender.

Awareness of changes high among landlords

What landlords are doing with non-compliant properties

Landlords appear split on how they will manage properties that are currently non-compliant. Over a third (35%) say they would carry out works at the minimum cost required to comply, whereas a third (32%) say they foresee spending what is needed to maximise the long-term value of the property, even if it exceeds minimum requirements. One in seven (15%) say they will not carry out necessary costs and either seek to sell or not re-let, and 2% will carry out the works to bring it up to standard and then sell it.

The EPC requirements have also meant future purchasing habits are likely to change, with two in three (65%) saying they are now less likely to purchase ‘D’ or lower-rated properties in the future. This could mean a trend towards New Build as a preference due to their higher energy efficiency specifications.

Jon Cooper, director of mortgage distribution at Aldermore, said: “With people’s lives revolving more around their homes than ever before, a robust private rented sector has never been more vital. The data suggests the looming EPC change will cause challenges, but the more support landlords receive from brokers and lenders now, the easier it will be to navigate.

“Encouragingly, awareness appears high among landlords so many will be thinking about what changes may need to be done already. As we move towards a post-pandemic environment, many landlords will be looking to the future, so it is the perfect opportunity for brokers to have conversations with their clients about the EPC ratings. This will ensure, where needed, a plan for financing can be mapped out to assist landlords in getting non-compliant properties up to standard.”