EPC C legislation & diminishing rental housing supply. 

Very  important topic: EPC C legislation & diminishing rental housing supply.

I want to dispel any confusion about this EPC issue. Those who don’t know, there is legislation being proposed that will force  landlords to upgrade their properties to EPC C From 2025.

I noticed some communication from one of our conveyancing solicitors suggesting that:

“Please note that beginning from 31 December 2025, all new tenancies of domestic rental properties in England and Wales must have an energy performance of at least EPC Band C, making it unlawful for Landlords to rent out properties with an EPC rating lower than the new standard.”

This is not actually strictly true. So far, the government is yet to comment on the consultation process that has been completed. So:

– No new legislation has actually been passed

– Considering the devastating effect this legislation would have on the private rented sector, especially for poorer renters, it would be very unwise of this government to force landlords to upgrade to EPC C. Reason: it will trigger a massive sell-off of lower quality houses which will go into the owner  occupier sector, therefore massively reducing the availability of rental property for lower-income people.

It’s also worth pointing out; the reason rents are rising in our hotspot areas is because there is less supply. And this is due to government regulations forcing landlords who had property in their own names and who were higher tax bracket income earners – to sell up. As a result there are nearly half the number of properties available for rent today versus 2019.  And of course this EPC legislation will just exacerbate the problem.

Of course, governments are often very unwise and maybe they want a nuclear meltdown of the rental sector?

What does it mean for you as clients of Invesmore?

– We always choose properties that could potentially be upgraded to EPC C

– We also always choose properties that are very resalable.

– Assuming you believe in the property cycle, by the time we know whether this legislation will come into force or not… If you decide not to invest in EPC upgrades, you will most likely be able to sell your property at a profit enough to cover purchase costs and give you some net cash gain.

As anyone who works with us knows, we constantly focus on risk management. And this EPC legislation is just another issue we have to deal with.

Worth reading:

https://www.simplybusiness.co.uk/knowledge/articles/2022/07/new-epc-rules-for-landlords/

https://www.propertymark.co.uk/resource/prs-falling-short-of-2028-energy-efficiency-target.html

https://www.propertymark.co.uk/resource/lagging-behind-energy-efficiency-in-low-viability-properties.html

https://www.thisismoney.co.uk/money/buytolet/article-10889583/Number-rental-homes-HALVED-2019.html