According to research from Foundation Home Loans, which was compiled by 983 online interviews, among portfolio landlords with six to 10 properties and 11 to 19 properties this rose to 74 per cent and for those with 20 properties or more this increased to 78 per cent.
Around 71 per cent of landlords surveyed said that they were aware of and understood the details of upcoming EPC legislation.
Nearly a quarter said they were aware but did not understand the details and only four per cent said they had no awareness.
The research also found that the average landlord has 3.3 properties with an EPC rating of D or lower and this goes up to 9.5 for landlords with over 11 properties.
Foundation Home Loans said due to this proportion it was not surprising to see a “strong awareness” of future minimum EPC landlord properties.
Over a third said they would carry out minimal work on properties with an EPC rating C or lower, and 20 per cent said they would carry out works to maximise the long-term value of property.
A quarter said they would not carry out any works and would sell the property or not relet it.
Landlords expected to spend £10,000 per property to each an EPC rating C, and this goes up to £11,500 for those with larger portfolios.
More than half said they would use savings, 18 per cent would access government grants or funding and 19 per cent said they would take up a further advance or take out a loan.
Future-proofed investments
Grant Hendry, director of sales at Foundation Home Loans, said while the mortgage sector may be “waiting for certainty and clarity” on EPC legislation, the research shows that “landlords are aware of what is likely to be coming, and are thinking seriously about their existing portfolios, how they might fund improvements, and what their plans might be when this is introduced”.
He said the cost to improve the EPC rating meant it was not surprising landlords were disinclined to buy properties below and EPC rating of C.
“In effect, they are future-proofing their portfolios by opting only to buy C and above properties now, while they will presumably focus on those properties within their portfolio which are not currently at this level,” he added.
Hendry said there was a “significant opportunity” for advisers to offer funding solutions for improvements and it was surprising that many landlords will use savings.
He continued: “What we do know is there are clearly mortgage pricing incentives to be accessed for properties which are already at EPC C – we offer such products – and as we move into the future, landlords are likely to see this as a further incentive to ensure the property is above C.
“Overall, it seems clear this will remain a major focus within the private rental sector for years to come, and from an advisory point of view, it is clearly worthwhile having these conversations with landlords immediately, particularly for those at the point of refinance, as they might want to take advantage of this opportunity in order to secure the funding they require for the works.
“As it stands, it appears we are looking at either a 2025 or 2028 implementation date, and clearly the former will be with us before we know it. It therefore makes sense to be exploring options with every landlord client, outlining what is likely to be coming, and working on those financial arrangements with specialist lenders like ourselves, in order that they can keep invested and meet the standards going forward.”
