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One in five landlords will spend over £500k to meet upcoming EPC standards

Anna Sagar
Written By:
Posted:
June 28, 2023
Updated:
June 28, 2023

Around 19 per cent of professional landlords expect to invest over £500,000 or more in the next year to refurbish properties in their portfolio to meet upcoming EPC regulation.

According to Handelsbanken’s professional landlords survey, which collated views from 200 UK property investors owning five to 15 properties, more than half are planning to invest more than £100,000 or more to bring their properties up to standard.

All those surveyed expected to invest at least £1,000 to improve properties.

Nearly all respondents, 92 per cent, said they expected the value of their portfolios to increase by at least five per cent in the next 12 months.

Handelsbanken said that £500,000 represented around 3.5 per cent of the average portfolio value of those surveyed, so landlords would likely see an increase in value in their investments.

More than half of those surveyed were optimistic that their commercial properties would meet their new standard by the deadline, but over two-fifths said they were only “moderately familiar” with the government plan to increase minimum EPC standard to B by 2030.

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Government legislation could mandate that all new tenancies should have an EPC C rating by 2025 and all tenancies should meet it by 2027. Properties might have to reach EPC B rating by 2030.

Richard Winder, head of sustainability at Handelsbanken, said: “Rolled up across a portfolio, these are not insignificant amounts, and for many investors, they represent a major step-up in capital expenditure.

“Beyond these Minimum Energy Efficiency Standards (MEES) requirements, there are growing expectations on both landlords and tenants to take action on climate change and nature, and these are beginning to affect the economics of the rental market.”

He continued: “Staying in line with EPC regulations and upgrading energy efficiency have become a priority for many customers, who are very aware of the associated challenges.

“We would encourage investors to look beyond the next compliance hurdle towards the broader sustainability transition underway, and to consider the efficiencies and opportunities that might be created by taking a long-term, strategic approach.”