Despite the government scrapping proposed regulations on energy efficiency, Paragon Bank’s research reveals that 37% of portfolio landlords are actively upgrading their properties to achieve an Energy Performance Certificate (EPC) of ‘C’ or higher. The findings are part of the bank’s Portfolio Landlord Report 2024.
In addition to those making upgrades, the research shows that 32% of portfolio landlords already own properties rated EPC ‘C’ or above.
However, some landlords are hesitant to invest in improvements without clear legislative direction, with 16% postponing any upgrades until new regulations are enforced.
Meanwhile, 10% of landlords stated that the change in proposed rules has no impact on their portfolio strategy.
The survey included nearly 400 landlords who own four or more properties. Their responses also indicate timelines for completing green upgrades: 28% aim to achieve EPC ‘C’ within one to two years, and 22% expect it to take three to four years.
Another 18% believe they will complete the upgrades within the next year, while 17% anticipate it taking five years or more.
This research comes in the wake of Prime Minister Rishi Sunak’s announcement that the planned changes to the current Minimum Energy Efficiency Standards, which would have required all properties let for new tenancies to have a minimum EPC rating of ‘C’ by April 2025, have been discarded.
Despite these regulatory shifts, the private rented sector (PRS) appears to be outperforming owner-occupied homes in terms of energy performance.
According to the English Housing Survey, 44.9% of PRS properties were rated between EPC ‘A’ and ‘C’ in 2022, compared to 43.3% in owner-occupied homes.
Richard Rowntree, managing director of mortgages at Paragon Bank, commented on the landlords’ proactive measures: “It’s encouraging to see portfolio landlords continuing to enhance their properties so they meet EPC ‘C’ or higher, despite the proposed regulations being shelved.
“These landlords will join almost a third more who have carried out sustainability-focused upgrades or purchased property already benefiting from energy-saving technology, highlighting the commitment amongst portfolio landlords to improve the standard of privately rented homes for tenants.”
Louisa Sedgwick, commercial director of mortgages at Paragon Bank, also noted: “We often see landlords release capital from existing properties in their portfolio to fund expansion or property upgrades.
“With mortgage rates lower than last year, we are seeing increased interest in remortgaging across the market to support landlord growth ambitions.”
