28th
Jul 2022
A lender’s survey found that there is massive ‘black hole’ in how much landlords are willing to pay to upgrade their properties to meet the proposed new EPC requirements and the actual ‘real’ cost.
The survey found that 77 per cent of landlords are only prepared to spend up to £3,000 on each property to meet the EPC C requirement if the new proposed regulation is brought in by the government. Further examination of the survey’s findings found that 78 per cent of landlords will have to spend more than £3,000 per property to reach the EPC C rating.
The government is also proposing to introduce a cap of £10,000 costs per property, however according to the lender’s analysis the average cost per property to meet the EPC C standard will be £10,560.
The survey’s results also found how BTL investors will attempt to fund the upgrades 60 per cent would use their savings which is the preferred option, 27 per cent would increase rents. 19 per cent are hoping to rely on government funding and 8 per cent would fund the costs by taking a further loan from their mortgage lender, whilst 7 per cent would release equity from their portfolio.
Due to the intended EPC requirements BTL investors buying patterns will change as 68 per cent of respondents said they would be unlikely to buy homes with EPC’s of D and lower in the foreseeable future. However 21 per cent did state that the EPC ratings of a property will make little or no difference on whether they would buy it, but only 4 per cent said they would buy a property if it was below an EPC C rating.
A spokesman for the lender, said: “It is encouraging to see that landlords anticipate that future portfolio expansion will target properties rated EPC C or above, bringing more energy efficient properties into the PRS. The company is one of a number of lenders to offer favourable rates that provide a financial incentive to this.
“Of course, this is only part of the issue as data shows that a large proportion of current PRS stock is below the standard required by the proposed new regulations.
“The apparent disparity in what it is likely to cost to meet these standards and what landlords are willing to spend helps to illustrate the financial challenge the new regulations would pose to buy-to-let investors.
“There remains a lot of uncertainty around the proposals, so the sector needs some clear guidance from the Government. With this, my hope is that landlords will have a better understanding of how the new regulations would impact them and the resulting financial support they would require.”
News Archive »