Landlords face £24 billion retrofit bill to meet new EPC target
A report by Reapit has revealed the staggering cost landlords will face to meet the government's ambitious target of raising the energy performance certificate (EPC) rating of all rental properties to C by 2030.
The estate agency tech provider says that retrofitting all private rented sector (PRS) properties in England, Scotland and Wales to EPC C would cost an incredible £24 billion.
This is, Reapit says, not only a huge financial burden for landlords - but most don't have the cash reserves to pay for the upgrade bill.
Landlords don't have the cash
The firm's general manager, Steve Richmond, said: "In all my years in estate agency, I don't recall landlords having that level of cash reserves.
"In fact, a recent survey by Skipton Building Society revealed that 39% of landlords would consider selling their properties rather than paying for the home improvements in their BTL properties."
He adds: "But as there's no debating the target, the question is, how can our industry prevent a large sell-off, ensuring tenants have properties to rent, and how can we go about helping landlords to retrofit more than 50% of PRS properties over the next six years?
"Our estimate puts the cost at just over £10,000 per landlord – perhaps a manageable investment for properties in the South East or London, but it could represent as much as 20% of the value of a small flat in Newcastle upon Tyne."
Landlords can't afford the upfront costs
Mr Richmond points to an Energy UK survey which revealed that 35% of landlords couldn't afford the upfront costs to make any EPC improvements.
Also, research from Hamptons shows that at the current retrofitting rate, it could take until 2042 to get every property in the PRS to an EPC C or above.
Mr Richmond said: "That's just eight years away from when the country should be hitting net zero!"
The report also highlights the potential impact of the EPC target on rent prices with landlords selling up leading to fewer homes and rents rising.
'Properties that can't be upgraded'
Mr Richmond goes on: "What about properties that can't be upgraded? Britain has some of the oldest housing stock in Europe, which presents a big cost and viability challenge.
"We can't afford to lose properties from the PRS because they cannot feasibly be retrofitted to an EPC C.
"Doing so would reduce the housing stock in the PRS by over 17%."
He added that rents would rise by 3% - on top of the usual rent rises - and a viable property exemption scheme needs to be worked on.
Mr Richmond warns: "If we lose even a fraction of the more than 50% of PRS properties that need retrofitting, it will hit tenants the hardest."
'Government's EPC target for the PRS'
The managing director of Accommodation for Students, Simon Thompson, said: "The government's EPC target for the PRS is a laudable goal, but it's essential to consider the practical challenges faced by landlords.
"We need to work together to find solutions that are both financially viable and effective in improving energy efficiency."
He adds: "The government needs to consider financial incentives, such as grants or tax breaks, to help landlords offset the costs of retrofitting their properties.
"However, there's a need for more investment in training and education to ensure that there is a sufficient supply of skilled tradespeople to carry out the necessary work."
