In the new Handelsbanken Professional Landlords Survey, research shows that 56 percent of the largest portfolio landlords are planning to invest £100,000 or more when new energy performance regulations come into force. The remaining landlords surveyed also expected to spend a considerable amount, with each property business owner surveyed planning to invest at least £1,000.
Compliance is known to be an expensive, arduous task for property owners and landlords, but it doesn’t have to be that way. Read on to find out more about what’s changing, the expected costs, and how Opago can help landlords to mitigate their outlays.
What Are the Current Requirements?
Since 2008, rental properties in England and Wales have required an Energy Performance Certificate (EPC). Then, ten years later, further measures were introduced with the minimum E rating for properties let or sold in England and Wales. In 2020, the rules were tweaked again, so now every property, whether it has new occupants or existing ones, needs to have an EPC with an E rating as a minimum.
If a property doesn’t have a valid EPC of a suitable rating, it cannot be legally let.
What Changes Are Being Made?
After a consultation in December 2020, the government announced changes to the Minimum Energy Efficiency Standards for England and Wales.
The government proposed that all rental properties will need an EPC rating of ‘C’ or above by 2028. Originally, these new regulations were to be introduced for new tenancies from 2025 first, followed by all tenancies from 2028. However, it was agreed that the deadline would be 2028 after further consultation.
The regulation changes are designed to make homes more energy-efficient and reduce carbon emissions as part of the government target to be net-zero by 2050. Greater penalties are also being introduced from 2028. Homes without a valid EPC will be fined £30,000, rather than £5,000.
What Will The Changes Cost?
The government is already aware of the cost involved in their plans for greater energy efficiency. Energy performance investment is currently capped at £3,500 for landlords, but as the higher EPC rating will require a greater investment, the cap will be raised to £10,000. This 185% cap increase shows the scale of the task, though the government estimates that, on average, the improvement needed to reach an EPC rating of “C” will cost landlords around £4,700 per property.
RentLondonFlats places the average rent of a two-bedroom apartment in London between £1,500 and £1,600. So, an outlay of £4,000+ is going to severely affect a landlord’s yield, especially with fixed-rate mortgages at 6% and an all-consuming cost of living crisis.
What Can Property Owners Do?
Beyond the legal requirement to make changes in the next few years, these new EPC regulations are a double-edged sword for landlords.
On one hand, these changes will make homes more efficient. This saves the landlord and their tenant money, and makes the home more sustainable, a major factor in where tenants choose to live. On the other hand, it’s going to be an expensive and likely complicated process. Portfolio owners with scores of properties face an uphill task to undertake the necessary changes alone, with a massive investment of time, resources, and finance required.
This is where Opago can step in. Our property operations services are designed to make everything hassle free for portfolio owners, all while increasing their yield and boosting their returns. Backed by outstanding technology, our compliance teams ensure properties are up to date with the latest legislation efficiently.
Our operatives carry out all manner of compliance tasks, including EPCs, and use our proprietary technology to track what’s been done, when further work is required, and any changes to legislation. These services make the change to greener homes easier for landlords, as they can leave everything with us and focus on other areas of the business.
Who Are We?
Opago is a premier provider of property operations in cities around the world. Centralised in London, we work to make owning and letting homes straightforward. Our in-house teams cover everything from maintenance and housekeeping to compliance and guest services, and first-class services are guaranteed.
We have expertise in working with a plethora of clients, including buy-to-let investors, student landlords, social housing operators, and more, and our services have helped clients to near-double their yields in some cases.
To find out more about how our compliance teams can assist you in their overhaul and beyond, get in touch today.
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