Landlords face £21bn bill to meet new energy efficiency standards

New rules to boost energy efficiency in rental homes could cost landlords over £21bn, new research shows.

The plans, from Net Zero minister Ed Miliband, would make both private and social rented homes reach a minimum EPC rating of C by 2030, up from the current E standard.

The study, conducted by tenancy deposit alternative firm Zero Deposit, reveals the substantial financial burden facing landlords across the country.

Sam Reynolds, managing director of Zero Deposit, commented on the implications:

“Our new Labour Government has been quick out of the blocks with respect to rental market reform, with the Renters’ Rights Bill widely focussed on the welfare of tenants, with little consideration for those who provide the rental accommodation we so sorely need.”

Reynolds added:

“The latest move to make an EPC rating of C mandatory by 2030 is much the same in this respect.

“Whilst it is, of course, a positive to improve the energy efficiency of rental homes within the PRS, the mandatory obligation to make these improvements is likely to cost private landlords billions.”

Over half of all private rental homes now have an EPC rating of D or lower, with about 12% rated E, F or G.

The situation varies by region, with Yorkshire and the Humber having the most homes needing upgrades – 74% might need work to reach EPC C by 2030.

While London has the fewest homes rated D or below, landlords there could face the highest costs to bring their properties up to standard.

The average cost to upgrade a rental home to a C rating is about £8,000 nationwide, but in London, it's £9,000 per property.

These costs add up quickly; with millions of homes needing work across England, the total bill for landlords could hit £21.455 billion.

London landlords alone might face costs of £3.798 billion to meet the new energy efficiency requirements.

Even in the North East, where upgrade costs are lowest, landlords face a group bill of £666.6 million.

Reynolds warns this could push many property owners over the edge:

“Yet another cost incurred due to legislative changes will likely leave a bad taste in the mouths of the nation’s landlords and it could well be the final straw for many who are sat on the fence as to their future within the sector.”

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