- More than a third of landlords lacking confidence they can improve their properties to EPC ‘C’
- Property constraints, access and disruption key challenges facing landlords to making changes
- Lack of finance also key issue; 14% will need to spend all their annual rental income, plus more
- TMW offers Green Further Advance at 1.49% - up to 50% lower than normal further advance rates
With less than four years left until the Government wants all new private rented tenancies to be in properties with at least an Energy Performance Certificate (EPC) rating of ‘C’, new research1 from The Mortgage Works (TMW) uncovers a lack of confidence from landlords about bringing their properties up to the required standard in time.
Current legislation in England and Wales requires buy to let properties to have at least an EPC rating of ‘E’ or above. However, in order to improve the energy efficiency of rental properties, the Government wants to increase the requirement to a ‘C’ rating for all new tenancies by 2025 and for all existing tenancies by 2028.
According to the poll of around 750 landlords, more than a third (35%) say they're not confident they'll be able to bring their properties up to the required energy efficiency standard. This is not only due to a lack of available capital but also a lack of awareness regarding what it takes to achieve that ‘C’ rating.
Challenges facing landlords:
The research highlights a number of challenges facing landlords in their attempts to meet the new sustainability requirements. The biggest issue faced is perceived property constraints, which more than half (51%) think will be a hurdle. However, it’s not all doom and gloom as one in ten (10%) don’t anticipate facing any challenges.
|1||Property constraints (i.e. limitations on what is possible for the building)||51%|
|2||Access to the property whilst tenants are renting||44%|
|3||Level of disruption required to carry out the work||44%|
|4||Limited payback on any investment||44%|
|5||Limited tangible benefit to the tenants||35%|
|6||Finding reputable tradespeople||34%|
|7||Finding available tradespeople||30%|
|8||Hassle of managing the extra work||27%|
|9||Knowing what is required/appropriate||27%|
|10||Lack of funds||27%|
Landlords with larger property portfolios were more likely to face potential challenges than those with a smaller number of properties, especially when it comes to property constraints (66% for those with 11+ properties vs 49% with 1-10 properties). The same applied to access (50% vs 43%) and disruption (50% vs 43%).
More than six in ten (61%) landlords say they'll need to spend money to get their properties up to an EPC ‘C’ standard. More than one in ten (14%) of them say they'll need to spend all of their annual rental income, and perhaps even more than that, on making the improvements to their properties. However, a larger proportion of landlords don’t feel they'll need to spend as much with nearly a third (29%) saying they'll need to spend less than 30 per cent of their annual rental income. Nearly one five (17%) won’t need to spend anything at all.
Where to start:
Even if the money is available, around one in ten (11%) landlords admit they have no idea of what work is required and don’t know where to start. Whereas around four in ten (41%) say they have either a good or clear idea on what to do. That figure increases to more than half (55%) of those with 20 or more properties in their portfolio.
TMW Green Further Advance:
More than a quarter (27%) of landlords say a lack of funds is one of the biggest challenges they face. So, in order to help landlords make their properties more sustainable and undertake the improvements needed, The Mortgage Works launched its first ever Green Further Advance earlier this year that comes with a rate of 1.49%. It is available to landlords with an existing TMW mortgage and allows loans of between £2,500 and £15,000 up to a maximum of 75% LTV. Landlords can opt for a two or five-year fixed product, with rates for those making green improvements to their property up to 50 per cent lower2 than standard further advance rates.
Daniel Clinton, Head of The Mortgage Works, said: “Given the concerns and challenges facing landlords in not only making the necessary improvements, but financing them, it’s perhaps no surprise that more than a third of landlords are not confident they'll be able to bring their properties up to the required EPC ‘C’ standard. As more than two in five landlords say a lack of funds or access to finance is one of the biggest challenges they face in greening their properties, we are doing our bit to support them with the recent introduction of our Green Further Advance product, with rates up to 50 per cent lower than our standard further advance products. It’s also great to hear that the Government would like to introduce a new financial support package2 to help people improve the energy efficiency of their homes, however, we hope that any such scheme would also be open to helping landlords meet their requirements.”
1 Research conducted by BVA Group / BDRC with 753 UK landlords between 20 June and 5 July 2021.
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