20th
Sep 2022
The overly expensive costs to upgrade the energy efficiency levels in landlord properties will almost certainly cause many to quickly sell up, according to Gavin Perrett the director of an Essex based property investment consultancy.
Currently the government has failed to respond to its consultation held in 2020 to find ways to improve energy efficiency in PRS homes, however it has released a draft strategy that features a ‘preferred policy scenario’ that all PRS properties with new tenancies must have an EPC rating of C or higher by 2025, and by 2028 it will become mandatory for all tenancies.
He says some landlords including so-called ‘accidental landlords’, those who are nearing their retirement age and small scale landlords, will probably prefer to sell up than pay for their properties to be upgraded to meet the government’s EPC demands.
Perrett says: “Those landlords are likely to put their properties on the market for a quick sale. Property sales are currently completing in around 150 days, which is quick, so they may choose to sell up now to extract their equity rather than commit to the long term.”
He also believes that with rental housing properties coming onto the market for quick sales could see BTL investors purchase new properties quickly and possibly at lower market prices, as some landlords will be panicked into selling up as soon as possible.
He continues: “For renters there is a benefit too as the quality of properties will improve over the long term. With improved energy efficiency and lower running costs, which at a time when inflation, interest rates, and the cost of living are rising quickly, having an energy efficient home is a clear benefit.
“As property standards are improved landlords are likely to be able to command higher rent and therefore a higher rental yield. Some landlords will lose out as they decide to sell, possible below market value, and for tenants they could be paying higher rents, but for properties that have been upgraded to a higher standard."
He closes by sending out a reminder to landlords that some properties may be exempt from upgrading as there could be some flexibility for listed buildings. He advises owners of such properties to contact their local planning departments, as there may be some concessions if making energy improvements would change properties’ fabric or drastically change their appearance.
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