Prime Minster Rishi Sunak has offered landlords and homeowners a financial lifeline with his surprise U-turn on EPC deadlines.
The government had planned to enforce energy efficiency targets on all households, including rental properties, throughout England and Wales.
The targets would have required all properties covered by a new tenancy agreement to meet an Energy Performance Certificate (EPC) rating of C or above by April 2025. All rental properties were also expected to meet the standard by 2028.
During a period when many landlords are already experiencing financial stress from increased taxation and higher interest rates, they were confronted with the daunting prospect of costly upgrades for their older properties, which could easily run into the thousands.
However, during a televised press conference from Downing Street on Wednesday 20th September, Rishi Sunak controversially axed these plans.
EPC rating deadlines have been scrapped completely, with no new date enforced. Plans to fine landlords who failed to upgrade their properties to level 'C' of energy efficiency have also been dropped, with the Prime Minister explaining: “asking homeowners and landlords to dig deeper into their pockets at this difficult time is unwanted pressure.”
As of 2020, more than 12 million homes had an EPC rating of D or lower. According to the Energy Saving Trust, the average cost of improving a rental property to reach a minimum of C grade was £7,430. This policy reversal by the government ensures that property owners will no longer be forced to make expensive improvements within the next two years.
Tenants are also expected to benefit from the deadline changes, as Sunak acknowledged that the cost of carrying out EP improvements would directly affect the rent they pay. Rental prices may have increased to compensate for the costs of landlords renovating their properties.
Sunak also announced an increase in grants to assist homeowners in transitioning from gas boilers to low-carbon heat pumps. The Boiler Upgrade Grant has been raised by 50%, from £5,000 to £7,500. Landlords will also have additional time to make the switch, as the deadline for phasing out fossil fuel boilers has been extended to 2035 – delaying it from 2026.
The government’s U-turn will bring relief to many landlords, but those who yielded to the pressure of the initial deadlines, and have already implemented costly improvements, may feel frustrated by the latest update.
The chief executive of the National Residential Landlords Association (NRLA), Ben Beadle, commented: “Some of our landlords even took the drastic step of selling their property because it was financially or practically impossible to make necessary improvements.”
Research conducted by lender Shawbrook on over 1,000 landlords revealed that 80% of them were ready for the 2025 EPC regulation deadline. The research also reported a trend that the now scrapped proposals had sparked a sense of environmental consciousness among landlords, prompting over 25% of them to give priority to purchasing newer, more energy-efficient properties.
While regulations will no longer be enforced by 2025, landlords are advised to ready themselves for future legislative changes. Those who invest in modern, energy-efficient properties will undoubtedly put themselves in the best position to attract tenants and meet government standards - ensuring a sustainable rental income for the future.
