The proposed EPC changes for the rental sector, where properties must be EPC C by 2025 for new tenancies (2028 for existing tenancies), could cause significant change in the property market.

If managed well, it’s an opportunity, if not then a lot of people (not just landlords) are going feel like they’ve been hard-done-by.

1. Some landlords are going to sell up

With reducing tax incentives for small landlords and this changing minimum EPC requirement, many small landlords will definitely be looking to sell up. In fact, this is what I did recently!

The house that I let out is a D. To get it to a C I would have needed to have had internal / external wall insulation, floor insulation, solar water heating AND solar PV. Just to get it to a C. The estimated cost was between £15,500 and £31,500. Even if this was fully paid for, when would I have time to organise and oversee these works? Would I take the risk of something going wrong or there being damage to the property? It’s just not going to happen.

83% of landlords have between one and four properties, so I would think a significant number would be in the situation I would have been in. What is surprising to me is that, according to Property Industry Eye, 63% of larger landlords are considering selling some or all of their properties compared to 35% with just one property. It’ll be interesting how this turns out.

2. There will be unintended consequences

The Property Industry Eye article also suggests unintended consequences including people who can’t buy struggling to rent as well.

I think this is true; private sector rents may go up and more social housing may be needed, but there are also a lot of people who are struggling to buy their first home and may soon find it easier to do so. Either way, this will help the number of transactions each year to continue to grow.

With landlords offloading inefficient properties, it also means that the problem is merely being shifted to homeowners. Hopefully, this will be seen as an opportunity for many to invest in their home (with appropriate support), but I wouldn’t be surprised if there is also a significant rise in fuel poverty.

3. Exemptions

There are already exemptions for listed buildings and it wouldn’t make logical sense to require a property to be at a higher rating than is physically possible according to the EPC.

I’m sure there will be other qualified exemptions and financial support. What if you let out a flat and to get it to a C you need external wall insulation, but other flats in the building don’t need this and don’t want to pay for the insulation? Bit of a conundrum.

So, it may not be as ‘bad’ for landlords as it first looks.

Bottom line, we need to decarbonise our housing stock and many landlords are going to find it easier to offload inefficient properties rather than upgrade them.

I think this will lead to some ‘bargains’ in the market over the coming years, but unless people buying these homes are supported and made aware of the costs and benefits of upgrading these properties, we’ll see more fuel poverty, more inequality and will not actually decarbonise our housing stock.