A survey conducted by The Mortgage Works (TMW) comprising 600 landlords found those with affected properties felt they would not be able to complete or finance the works needed in the time set out by the government.
The government has suggested a change to the law requiring all new rental tenancies to have a rating of C and above by 1 April 2025, while existing tenancies will have to meet this target by 2028.
Current law states that a rental property must have an EPC rating of E or above.
Those with larger portfolios were more likely to consider selling, with 58 per cent of landlords with six to 10 properties saying that they had thought about selling some or all of their properties. This figure rose to 63 per cent among landlords with 20 or more properties.
Just 35 per cent of landlords with one property said they thought about disposing of their asset.
Daniel Clinton, head of lending at The Mortgage Works, said: “With currently less than four years before all new tenancies need to be in properties rated EPC-C or above, there are still landlords who need to undertake remedial work on at least one of their properties.
“They are therefore understandably concerned about how they will both fund the work, find someone to do it and have it completed in time.”
He added: “The side effect of these concerns is that a significant number of landlords admit they are ready to give up and already considering selling properties.
“An unintended consequence of this sentiment could result in a backwards step in meeting the government’s target around climate change, for example, if these properties are taken up by the owner occupier market, where there are currently no minimum energy efficiency requirements.”
Portfolio landlords most affected
Landlords with larger portfolios were more likely to have a higher number of properties in need of refurbishment too, the research found.
Those with four or five properties have an average of two properties that need work. This increased to four homes for those with six to 10 properties, seven for those with 11 to 19 properties and 12 for those who have 20 or more properties.
Some 35 per cent of landlords with one property said it was rated between D and G, while 52 per cent claimed their property already met the proposed standard.
Lack of knowledge
Two thirds of respondents said their properties needed improvements to be energy efficient however, a third admitted they did not know what renovations would be necessary, highlighting a lack of knowledge.
For those who did know, 37 per cent said traditional insulation was needed, a quarter said an upgrade to the boiler would be necessary, while 24 per cent said they needed to refurbish existing utilities.
Again, it was landlords with more properties who said they would need to undertake the most remedial work. The proportion of landlords stating their properties needed insulation rose to 59 per cent for those with 20 or more properties, boiler upgrades increased to 37 per cent of landlords with this portfolio size.
Expenses
The research showed that landlords had an average of £15,579 set aside for unexpected costs related to their rental properties. However, more than 51 per cent fell short of this average, citing they had less than £10,000.
Although landlords with 20 or more properties had larger savings of £35,202, the average amount per property was less than those with smaller portfolios.
Clinton said: “Financing is also key and while our research suggests landlords have money set aside to deal with unexpected costs arising from their properties, it may not be enough to also cover the energy efficiency improvements.”
