Landlords will spend £3,000 to achieve a C rating.

Research from Paragon Bank reveals that the majority of landlords are prepared to spend up to £3,000 to bring their properties up to the (proposed) EPC target.

In the survey of 800 landlords 77% were willing to spend up to this amount, which is significantly short of the £10,650 the vast majority of landlords (78%) are going to need to spend to achieve this rating.   

21% of landlords to exit PRS

The research reveals that less than ¼ of current landlords would exit the PRS market if the current proposals become law. Of those that were prepared to undertake the necessary work 1/3rd would do so at a minimum cost, while 15% would invest more to maximise the long term value of their rental properties.

However, this data relates primarily to landlords who have a good awareness of the current proposals and does not account for those landlords that are not currently aware of the proposals as previously covered.

‘Professional landlords’ are more likely to be aware of and plan for the potential changes. For example, 95% of landlords with portfolios of 20+ properties claim to be fully up to date.

78% concerned about the cost of improvements

The majority of landlords (78%) are worried about funding the cost of any improvements. Other concerns include;  

·         Ability to keep renting (62%)

·         Disruption for tenants (52%)

·         Ability to re-mortgage (38%)

·         Risk of legal action (35%)

·         Ability to sell property (34%)

For those willing to consider funding the work, the main source of funding would be savings (60% of landlords). Only a relatively small proportion of landlords would increase rent (27%) or borrow money (16%).

The scale of the challenge

Currently around 38% of homes in the private rented sector have an EPC of C or higher, so the potential impact of the change is vast. This illustrated by the data on BTL mortgages written on properties with an EPC below C.

·         58% Nat West

·         61% Lloyds

·         65% Paragon

·         68% Nationwide

The evidence is clear that large numbers of landlords will need to start planning for this change which is likely to have a significant financial impact on them.