With new research showing only 41% of homes in England meet recommended Energy Performance Certificate standards, Jason Harris-Cohen of Open Property Group argues that efforts to “green up” the UK’s housing stock are a drop in the ocean
Last month, we released new research that revealed how just 41% of homes in England meet the recommended Energy Performance Certificate rating of C or above. This is just a 1% increase compared to the previous year.
Considering almost one in five homes are in the private rented sector, this means that around 1.8m tenanted properties could still be non-compliant under the new minimum energy efficiency standards. A further 1.6m homes in the social rented sector may also fail to meet these standards if landlords and housing associations do not make improvements.
Within days, a report in the Daily Telegraph suggested that the government will now extend the deadline for landlords from 2025 to 2028. Originally, the recommendation was that all rental properties entering new tenancies would need to have an Energy Performance rating of C or above by 2025, followed by all existing tenancies in 2028 and the rumour is that these deadlines have now been combined.
Breathing space or hot air?
Although this hasn’t been confirmed officially, it will potentially give landlords some breathing space to make energy performance upgrades, but that’s if they even stay in the sector that long.
We’ve already seen a sharp rise in enquiries from landlords looking to sell up fast, and the hassle and investment needed to bring their properties up to scratch is one of the key reasons.
With other research from Paragon Bank suggesting that the average cost to bring a property up to scratch is more than £10,500, and over three quarters (77%) of landlords only willing to spend up to £3,000, the number of landlords forced out will only rise.
Tax increases, rising finance costs and laborious legislation caused 70,000 landlords to leave the market in 2022, according to the analysis of HMRC data, and with the cost of managing a rental at an all-time high too, liquid capital is in short supply.
The upgrade costs and associated expenses facing landlords are severe
The price cap has already been raised from £3,500 to £10,000, which is the maximum amount a landlord is expected to pay before being able to apply for a grant or exemption.
NRLA and other lobbying groups are, and rightly so, arguing that this system is unfair when the value of rental stock varies so greatly. A £10,000 upgrade project on a £500,000 home is one thing but it represents a significant proportion of the value of property in certain regions.
While changing lightbulbs and adding an extra layer of insulation to the loft will no doubt help, the major alterations that really improve an Energy Performance Certificate are expensive. Double glazing, solar panels and heat pumps tick the boxes but they are expensive items to purchase, cause major disruption to install – perhaps even requiring the tenant to temporarily vacate – and there is no proven return on investment for newer technology. There’s also the added complication of a lack of materials and labour, meaning even the most willing of landlords are thwarted.
If that wasn’t enough, the three-year extension comes with another blow in the form of increased fines for not having a valid EPC, up from £5,000 to £30,000.
Energy Performance Certificates are a drop in the ocean
Perhaps more worrying is the fact that there are still new homes being built that don’t meet the newly proposed standard.
Our research found that in 2021, 95% of new builds recorded an Energy Performance Certificate rating of C or above compared with 96% in 2022, so even some developers aren’t currently meeting these standards.
Despite multiple campaigns, press coverage and a lot of noise around “greening up” the UK’s property stock, homeowners are woefully behind the government’s target too.
The recent Powering Up Britain announcement, which rebranded the ECO+ scheme as the Great British Insulation Scheme, feels like chicken feed to me.
Of course, any financial support is welcome, particularly for those struggling the most, but upgrading 300,000 of the country’s least energy-efficient homes is a drop in the ocean.
When you consider that some 14.7m homes aren’t currently rated C or above, introducing an initiative to improve 300,000 properties represents a minute portion of the stock at 2%.
It’s astonishing that this scheme will take three years to carry out too, when there will still be a significant number of properties, lived in by cash-strapped owner-occupiers or rented out by struggling landlords, that need to be upgraded.
It’s a start, but far from enough, and I’m keen to know what other support will be given in the coming years.
Jason Harris-Cohen
Managing Director
Open Property Group
Tel: +44 (0)800 990 3939
