EPC legislation - A Shift in Policy, Not in Investment

EPC legislation - A Shift in Policy, Not in Investment hero

The Scrapped EPC Regulation: What It Means for Landlords and Tenants

In a surprising turn of events, the UK government has decided to abandon its plans to require all newly rented properties to achieve a minimum Energy Performance Certificate (EPC) rating of C by 2025. While this policy shift may come as a relief to some landlords, it's essential to explore the implications of this decision and what it means for both property owners and tenants.

A Shift in Policy, Not in Investment

Despite the government's U-turn on the mandatory EPC rating of C for rented properties, it's worth noting that many landlords have already taken proactive steps to improve the energy efficiency of their properties. In fact, four out of every five landlords have been investing in their properties to ensure compliance with the now-abandoned regulation. Some have invested significant sums, ranging from £500 to £20,000, over the past year!

While the policy may have changed, the investments made by landlords have not been in vain. Modern, energy-efficient properties continue to be attractive to renters and prospective buyers. As a result, landlords with well-maintained, energy-efficient properties are likely to see returns on their investments in the form of increased tenant demand and property value.

EPC ratings, which provide information about a property's energy use and typical energy costs, have gained importance among both renters and buyers. Over three-quarters of renters surveyed have expressed the significance of EPC ratings when considering a property, and more than two-thirds of buyers also consider EPC ratings important for future resale value.

The decision to abandon the mandatory EPC rating of C for rented properties can be attributed to concerns raised by Prime Minister Rishi Sunak. He argued that the extra expenses landlords would have to bear in meeting the new requirements might be transferred to tenants in the form of higher rents, which, particularly amid a cost of living crisis, would not serve the best interests of the population. Consequently, the government decided against implementing the regulation to ease the financial burden on both landlords and tenants. One of the main issues with the abandoned regulation was that many older properties, particularly those constructed in the 1950s and 1960s or earlier, would have required extensive alterations to meet the new EPC requirements. This would have potentially led to a significant number of landlords deciding to sell their properties, which could have caused a crisis in the rental market.

What do our Jones Robinson experts think?

At Jones Robinson, we are dedicated to helping our landlords make the most of their assets and have received mixed reactions. While some of our landlords have expressed relief at not having to make substantial investments during a challenging financial climate, others were concerned about the implications of this policy reversal.


Anna Hill, Head of Property Management and Lettings Operations, commented: “While the EPC legislation has been discarded, we strongly recommend that landlords persist in enhancing their properties to raise their EPC rating. This proactive approach will not only enhance the property but also boost its desirability among potential renters or buyers.”


Penny Watson, Assistant Head of Property Management, added: “We want to emphasise to landlords that there's no need for alarm. Any funds previously allocated to property improvements remain a valuable investment, even though it's no longer a legal mandate. Additionally, many of our landlords can now retain their properties for rent, as opposed to facing potential sales due to the proposed legislation.”

 

Source: Dataloft Inform Poll of Subscribers (August), Shawbrook Bank August 2023, Dataloft Property Academy Survey 2022