EPC requirements could force accidental and small landlords to sell

  • 08/09/2022
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EPC requirements could force accidental and small landlords to sell
Upcoming legislation on Energy Performance Certificate (EPC) requirements for rental properties could force some landlords to sell properties in the short-term due to “perfect storm” of rising compliance costs and cost of living crisis.

The EPC legislation could mandate that new tenancies should have an EPC rating of C or high, by 2025, which is up from the current E rating requirement. For existing tenancies, the proposed deadline is 2028.

Mortgage broker firm Liddle Perrett noted that due to the uncertain economic environment landlords could choose to cash in now rather than “take the risk of riding out the current economic storm”.

It noted that this was especially the case for accidental landlords, people with property investments reaching retirement age and small landlords.

Landlords with older properties will also be under more pressure as they may have lower EPC ratings and could require more investment to improve.

The broker firm said that this presented an opportunity as there would be an increase of available rental property that investors looking for additional properties could buy, improve and add to their portfolios.

David Liddle, founder of Liddle Perrett, said: “The news for the buy-to-let market isn’t all bad. For landlords looking to invest, suitable properties coming onto the market for a quick sale represent new investment opportunities.

“Potential landlords who invest in new build property are able to take advantage of more energy efficient homes as a “plug and play” option with a view to future proofing their investments for the future.”

He added that that those buying new build properties could be “paying over the odds for new property”, so the availability of older homes was a “new opportunity”.

“With completions currently quite fast at around 150 days, and sellers looking to secure their equity, there are some very motivated sellers in the housing market which will stimulate sales.”

Liddle said that EPC rules could be an extra cost that some landlords may not be willing to absorb, but it could be an opportunity for other professional investors.

“Not only that, but the end result of the change to EPC rules means that over the long term, the quality of the housing stock will increase, and the cost to tenants of running their homes will fall due to improved insulation, replacement of white goods, boilers and other household equipment with more energy efficient products,” he added.

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