Reacting to Prime Minister Rishi Sunak’s decision to soften the requirements on homeowners and landlords to improve the energy performance certificate (EPC) rating of their properties, it was suggested that the announcement provided some short-term relief.
Emma Cox, managing director of real estate at Shawbrook Bank, said: “Scrapping the impending EPC regulations might free up capital in the short-term for landlords who haven’t yet invested in improving the energy rating of their properties. But while policies shift, climate change is going nowhere, and energy efficient buildings will remain central to net zero plans.
“Rules might not be changing as soon as 2025, but professional landlords with modern, energy efficient stock will be in the best position to attract tenants, as well as reduce potential voids, and importantly, be prepared for future legislative change.”
Paresh Raja, CEO of Market Financial Solutions, said the U-turn on green pledges felt “significant” and would “create a furore that will last for some time”.
Raja said it was a complex issue which would see many landlords “breathe a sigh of relief” as there was no longer a dead hardline and tenants would avoid a potential rise in rental prices.
However, he said many landlords had already made improvements at a “great cost” which “may trigger some frustration”.
Raja also said this did not mean policies would not be introduced in the future.
He added: “The next General Election could result in the winning party reintroducing new EPC rules anyway, so the decision brings further uncertainty into a property market that would benefit from greater stability. Meanwhile, there are some renters who will worry about living in properties with poor energy efficiency – their bills this winter will reflect that.”
Ben Thompson, deputy CEO of Mortgage Advice Bureau agreed, saying: “The reality is that the UK will still need to upgrade its leaky housing stock. With energy bills in the spotlight, EPC ratings are climbing up prospective buyers’ wishlists, and if the housing market is to meet net zero targets, properties need to be retrofitted.
“The UK has some of the oldest and least efficient homes in Europe, and backtracking won’t help solve the overall problem – it simply serves to kick the can down the road.”
Improvements still need to be made
Propertymark said it still wanted to work towards more sustainable homes, as long as plans were “realistic and most importantly achievable”.
It said there needed to be consideration of the scale of the challenge to do so, the skillsets needed to achieve this and how contractors would scale themselves to meet legislation.
The association said clear communication and a timeline of expectations would also be required..
Nathan Emerson, CEO of Propertymark, said: “Propertymark believe in robust forward provision to ensure the economics of any net zero targets are fully balanced and that investors, homeowners and landlords have support and motivation to initiate the required changes.
“All new targets must be fully backed by legislation that incentivises and encourages people rather than penalises them.”
Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), said the association wanted to see properties be as “energy efficient as possible” but the prior uncertainty was “hugely damaging” to the supply of rented homes.
He added: “Landlords are struggling to make investment decisions without a clear idea of the government’s direction of travel.
“It is welcome that landlords will not be required to invest substantial sums of money during a cost-of-living crisis when many are themselves struggling financially. However, ministers need to use the space they are creating to develop a full plan that supports the rental market to make the energy efficiency improvements we all want to see.
“This must include appropriate financial support and reform of the tax system which currently fails to support investment in energy efficiency measures.”
Timothy Douglas, head of policy and campaigns at Propertymark, said property agents had been “desperate” for clarity from the government.
He said increasing the Boiler Upgrade Scheme grant would support more landlords and homeowners, but awareness of the scheme was still low.
“Despite the cooling of approach from the Prime Minister we hope that this hands-off way of doing things allows homeowners and landlords to improve properties at a more flexible and affordable timetable which they can more easily manage,” Douglas added.
Cara Imbrailo, partner at Charles Russell Speechlys, said this was only a “temporary reprieve as the private rented sector accounts for 20 per cent of the UK’s housing stock, which is thought to be responsible for 15 per cent of UK greenhouse gas emissions”.
She continued: “If the government is serious about reducing emissions and reaching net zero, improving the energy efficiency of the private rented sector is unavoidable and a question of ‘when, not if’.”
Raja said the long-term goal was for every industry to work towards a more sustainable future.
