The government has confirmed its target rating for energy efficiency in the private rented sector. How much will it cost landlords?
Under the government’s plans, privately rented properties will have to achieve a minimum Energy Performance Certificate rating of C by 2030. Before that, the Conservative government introduced an EPC E minimum for new tenancies in 2018, with plans for an increase to a minimum EPC C by 2028. However, this was scrapped under prime minister Rishi Sunak.
According to Ed Miliband, the Secretary of State for Energy Security and Net Zero, improved energy efficiency will reduce the fuel bills on an estimated 3.2 million people in fuel poverty in the UK.
What will it cost?
A Reapit analysis of over 52,000 PRS properties in England, Wales and Scotland found that it would cost £24 billion to bring all non-compliant properties up to EPC C. Currently less than half of privately rented homes (48.5%) meet the proposed minimum, meaning that around 2.7 million homes would need to be upgraded.
The average cost per landlord is also heavy, coming in at £10,442 each, but those with properties rated EPC E or worse could face much higher costs. The previous government had planned to exempt properties from the minimum EPC if it would cost more than £10,000 to bring them up to standard, but so far the new government has not committed to a cost cap for landlords.
Private rented sector organisations are calling on the government for more support. Propertymark has argued that the subsidies currently on offer, like the Boiler Upgrade Scheme, don’t go far enough. Without support, tenants’ savings on energy bills could be eaten up by rent increases as landlords struggle to recover the cost of upgrades.
It’s also likely that a lot of landlords will sell up rather than pay for uncapped renovation costs. Reapit estimates that, unless exemptions are given, 17.4% of private rented sector stock could be lost – about 880,000 homes. As the PRS already suffers from supply shortages, this would be devastating for tenants.
To find out more about energy efficiency in the private rented sector, read Reapit’s full report.
