September, 2023
Prime Minister Rishi Sunak has delivered a surprising reversal on Energy Performance Certificate (EPC) deadlines, extending a financial lifeline to landlords and homeowners.
Initially, the government intended to enforce energy efficiency targets, applying to all households, including rental properties, across England and Wales. These targets mandated that properties under new tenancy agreements achieve an EPC rating of C or higher by April 2025, with all rental properties expected to meet this standard by 2028.
Amidst a period marked by financial pressures on landlords due to increased taxation and rising interest rates, the prospect of costly upgrades for older properties loomed, potentially running into thousands of pounds.
However, in a televised address from Downing Street on September 20th, Prime Minister Rishi Sunak controversially abandoned these plans. The EPC rating deadlines were completely scrapped, with no new date imposed. The government also dropped plans to penalize landlords who did not upgrade their properties to a 'C' level of energy efficiency, with Sunak explaining that imposing additional financial burdens on homeowners and landlords during these challenging times was unwarranted.
As of 2020, over 12 million homes had EPC ratings of D or lower. According to the Energy Saving Trust, the average cost of elevating a rental property to a minimum C grade was £7,430. This policy reversal ensures that property owners will no longer be compelled to make costly improvements within the next two years.
Tenants are also expected to benefit from these deadline changes, as Sunak acknowledged that the cost of EPC improvements would directly impact the rent they pay. Rental prices might have risen to compensate for landlords' renovation costs.
Additionally, Sunak announced an increase in grants to aid homeowners in transitioning from gas boilers to low-carbon heat pumps. The Boiler Upgrade Grant has been raised by 50%, from £5,000 to £7,500. Landlords also have more time to make this transition, with the deadline for phasing out fossil fuel boilers extended from 2026 to 2035.
While the government's U-turn provides relief to many landlords, those who acted under the pressure of the initial deadlines and already implemented costly improvements may find the latest update frustrating.
Ben Beadle, the chief executive of the National Residential Landlords Association (NRLA), commented that "Some of our landlords even took the drastic step of selling their property because it was financially or practically impossible to make necessary improvements."
Research conducted by lender Shawbrook on over 1,000 landlords revealed that 80% of them were prepared for the 2025 EPC regulation deadline. The research also noted a trend where the now-discarded proposals had sparked environmental awareness among landlords, prompting over 25% of them to prioritize purchasing newer, more energy-efficient properties.
While regulations will no longer be enforced by 2025, landlords are advised to prepare for future legislative changes. Those investing in modern, energy-efficient properties will position themselves favorably to attract tenants and meet government standards, ensuring a sustainable rental income for the future.
