Research from Foundation Home Loans found that just over two-thirds (67%) of landlords own at least one property that does not meet the Government’s proposed Energy Performance Certificate (EPC) Band C targets.
This Q3 2024 Landlord Trends research, conducted by Pegasus Insight, was based on 720 online interviews conducted between September and October 2024.
The findings followed the Government announcement that it will consult on proposals requiring private and social rented homes to achieve Band C or equivalent by 2030.
Currently, private rented homes can be let if they meet EPC Band E, while social rented homes have no minimum energy efficiency standard.
Awareness of EPC standards was high, with 92% of landlords having at least some knowledge of the requirements, though only 67% reported having a thorough understanding.
Portfolio landlords with four or more buy-to-let (BTL) mortgages showed slightly lower comprehension, with 62% stating they fully understand the requirements compared to 69% of unencumbered and consumer borrowers.
In terms of compliance plans, 42% of landlords intended to make necessary improvements to meet the standards.
Of these, 24% planned minimal-cost works to comply and continue letting, 14% planned for works that maximise long-term property value, and 3% planned to bring the property up to standard and then sell it.
In contrast, 34% planned to sell without making improvements or not re-let the property, while 17% selected ‘other’ and 3% did not plan any works but will continue to let the property.
To fund the necessary improvements, most landlords expected to use savings (71%), rent increases (42%), or Government grants (28%).
A further 12% planned to release equity from their portfolio, while 5% considered a further advance from a mortgage lender or a loan.
Landlords estimated an average cost of £12,000 per property to achieve an EPC ‘C’ rating.
Planned upgrades included solid wall or floor insulation (37%), loft insulation (26%), boiler or heating system upgrades (25%), and solar PV panels (22%).
Notably, 13% of landlords are uncertain about specific improvements needed, while 37% are unsure of the total potential cost per property.
Grant Hendry, director of sales at Foundation Home Loans, said: “With potential new legislation aiming to raise energy efficiency standards and tackle fuel poverty for millions, landlords face important decisions around future-proofing their investments from an EPC perspective.
“Thankfully, this research helps demonstrate growing awareness among landlords around this topic and highlights both the financial and planning considerations involved in meeting these requirements.
“It also underlines the tremendous potential for lenders and intermediaries to support sustainable practices in the buy-to-let sector, particularly through tailored green mortgage products that align with both regulatory demands and landlords’ unique needs.
“As landlords adopt varied approaches to meet these standards, ranging from minimal-cost upgrades to comprehensive property improvements, it’s clear that personalised guidance is essential.
“Green mortgage solutions can offer landlords a strategic way to finance these upgrades, enhancing property value and reducing long-term costs.
“For lenders and intermediaries, these conversations not only strengthen client relationships but also broaden the scope of services in a sector increasingly focused on sustainability.”
