According to a survey of 348 landlords undertaken by Paragon, over three quarters of landlords – 77 per cent, were willing to spend up to £3,000 to upgrade each property they own to Energy Performance Certificate (EPC) rating of C.
However, the specialist lender said around 78 per cent of landlords would need to spend more than that amount.
Research by Paragon said the average cost to upgrade a property to an EPC rating of C would be £10,560. This is taking into account the proposed cap of £10,000 per property.
Proposed legislation from the government could require all properties let for new tenancies to have an EPC rating of C or higher by 2025 and all tenancies by 2028. This has not yet become law.
The report added that the most popular finance to fund works cited was savings, followed by increasing rent.
Around 19 per cent said they would rely on government funding, and eight per cent would use a further advance from a lender or take out a loan. Nearly seven per cent said they would release equity from their portfolio.
The report also found that 68 per cent of landlords were less likely to buy homes with an EPC rating of D or lower in the future and just 21 per cent said it made no different to future acquisitions.
Only four per cent said they would be more likely to buy a property rated EPC C or lower.
Richard Rowntree (pictured), mortgages managing director for Paragon Bank, said it was “encouraging” to see that landlords were anticipating future portfolio expansion with properties rated EPC C or above as it would bring more energy efficient property in to private rented sector.
However, he said that a large proportion of stock was still below EPC C and there was a disparity in how much landlords would want to pay and how much it would cost.
He explained: “The apparent disparity in what it is likely to cost to meet these standards and what landlords are willing to spend helps to illustrate the financial challenge the new regulations would pose to buy-to-let investors.
“There remains a lot of uncertainty around the proposals, so the sector needs some clear guidance from the government. With this, my hope is that landlords will have a better understanding of how the new regulations would impact them and the resulting financial support they would require.”
