New EPC Legislations

What is Energy Performance Certificate or EPC?

An Energy Performance Certificate measures the energy efficiency of a property on a scale of A to G. It is a way to understand how efficient energy consumption is within a property and provides a score from 1 to 100 with each score banded into energy rating between A and G.
The lower the score, less is the property energy efficient. As per current standards, a landlord/investor need a minimum rating of E to legally let out a property.

What is Changing?

In 2015 the government introduced the Minimum Energy Efficiency Standard (MEES) that requires landlords to reach an Energy Performance Certificate (EPC) rating of C or above. Under the proposed changes, by 2025 all newly rented properties will needs to have reached this target. This will be extended to all rental properties by 2028.

How big is the problem?

Around 36% properties (more than 3rd) of current properties in the UK were built prior to 1940 and 4 out of 10 landlords in London said there properties were built prior to this period. This provides enormous challenges to landlords for making improvements, in some cases not financially viable to make a property energy efficient. Close to a quarter of landlords admitted that their properties are rated D or below for energy efficiency, and therefore they will not be able to begin a new tenancy by 2025 without actively making improvements.

How does this impact Buy to let Landlords?

Landlords will needs to be proactive over the next couple of years and take a stock of energy efficiency within the properties. They estimate it will cost £5,900 on average to make improvements to their property to make it energy efficient and meet the minimum standards. However, amid the surge in the cost of both labour and materials alongside an expected spike in demand as other landlords update their properties at the same time, this figure could be largely under-estimated.
Another area landlords needs to consider is at what point do they make the necessary adjustments to improve the energy efficiency. Typically, this is suitable during change of tenancy or depending on the works required, it could be done during tenant occupation.

Funding EPC Changes

There are a host of options available to the landlords to fund these up-coming changes. Landlords can either look into their savings, take out a short-term personal/business loan or think about raising further finance on re-mortgage. It will certainly help to plan in advance, especially if any of your existing mortgage products are up for renewal before the deadline in 2025.

How can we help?

If you needs any help in re-mortgaging your residential or BTL properties, or even like to discuss any short-term lending options, please feel free to reach out to me.

Source: Gov.uk, Shawbrook Bank.

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