The lender says imposing the requirement on all tenancies by 2030 could cause “significant disruption” to an industry that is already dealing with changes brought about by the Renters’ Rights Bill, which could force some landlords to sell, making the supply and demand imbalance even worse.
In response to the government’s Improving the energy performance of privately rented homes consultation, which closed on 2 May, Paragon proposed that the deadline for new tenancies should be extended from 2028, the current recommendation, to 2030.
Furthermore, the lender has suggested a new tier be added to the programme roll-out that sets a deadline of 2033 for extended tenancies, followed by 2035 for all tenancies, instead of the currently proposed target of 2033 set by the Department for Energy Security and Net Zero.
Rushed laws will damage PRS
Paragon argues that this time frame is too short and detrimental to the sector.
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Louisa Sedgwick (pictured), Paragon Bank managing director of mortgages, said: “Rushed legislation could cause significant disruption to a privately rented sector that will already be adapting to the new Renter’s Right Bill, forcing some landlords to sell because they cannot complete works in time. Adopting a more considered and realistic time frame will give landlords more capacity to adapt their properties, allow the retrofit supply chain and labour force to grow and, ultimately, will be more beneficial for tenants.”
Approximately 60% of properties in the private rental sector across England and Wales are currently at EPC D or below, according to Paragon’s analysis of the Energy Performance of Buildings Data: England and Wales.
Based on this volume, the bank estimates that 1.6 million properties would need to be upgraded annually to meet the 2030 target, which equates to retrofitting around 2,000 properties every day to meet the 2030 deadline, or 4,000 to hit the 2028 deadline.
Paragon’s research of nearly 900 landlords, conducted by Pegasus Insights, found that only 17% believe 2030 to be a reasonable deadline for completing EPC works. Additionally, nearly three-quarters (73%) of landlords report tenant demand to remain strong, while Zoopla’s latest rental report found that tenant demand is 79% above pre-pandemic levels, with available stock 22% lower.
Sedgwick added: “We support the government’s net zero target and understand the need for strengthening policy and regulation to drive climate action, but we would strongly urge that a longer-term and more balanced approach is taken to allow the retrofit supply chain to grow.
“Increasing the delivery timeline and maintaining flexible exemptions allows for a smoother transition to EPC A-C in the PRS, without exacerbating the demand and supply imbalance, which is already expected to grow due to forecast population growth and demographic changes.”
