Hamptons lettings agency says it’s calculated what types of homes will be simply unable to be improved to reach the government EPC targets.
The Conservatives planned to increase the energy efficiency requirements so that all private rented homes needed to have an EPC rating of C or above. However, these plans were axed in 2023.
But now new Energy Security and Net Zero minister Ed Miliband says the government will reinstate these targets so that all private rented homes have an EPC C rating or above by 2030.
Hamptons says that existing homes with lower EPC ratings and those unable to achieve a rating of at least EPC C are disproportionately older, cheaper, and likely to be located in the North of England.
This is why the average EPC D rated home achieved a gross yield of 7.6% in 2024, outpacing a yield of 5.5% achieved on the average EPC A rated home, which tends to be newly built.
EPC E rated homes achieved the highest yields of 7.9%.
The agency claims that the value and the way many of these higher-yielding homes are built is likely to mean an EPC C rating is often unviable and, in some cases, unobtainable. The reality is, that several landlords will hit a spending cap before reaching the proposed energy target.
The agency says that for tenants, the financial benefit of a higher EPC rating is significant, particularly as energy prices have risen.
Today, the average tenant will save £499 per year on their utility bills (gas and electricity) if their home is upgraded from an EPC D to EPC C rating, a 76% increase in savings since 2019.
Tenants in EPC E rated homes will save £1,248 per year, an increase of 83% since 2019.
For those private rental homes that can be significantly improved, Hamptons says it will take no less than 18 years for all to achieve an EPC rating of C or above.
That would be 12 years beyond the government’s 2030 target.
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I'm a chartered surveyor and both a commercial and domestic landlord.
Before doing a 'between tenancy' refurb of a house or flat I get a DRAFT predicted EPC prepared by a local energy assessor (full SAP software qualified assessors are the best. To find one look on the national EPC database and tell the database that you are looking for a new EPC for a New Building - these assessors are better qualified). I aim to get BOTH the 'Running Cost' EPC to Grade C and also the 'CO2 Pollution' EPC to Grade C. A lot of people do not realise that domestic EPCs have two separate Grades on the certificate - one measuring Running Cost and one measuring CO2 Pollution.
It doesn't take much to put 2 x layers of new Rockwool in a home's loft (one at right angles to the other), fill the cavity wall with insulation or get a local plasterer to fit sheets of 5cm thick Celotex on the inside of external facing walls and cash-in the generous £7,500 Government grant to install an efficient, high-temperature electric heat pump from Octopus Energy. I've had an Octopus Cosy 6 heat pump installed in a rental house I own in Bracknell. The old gas boiler came out and the new heat pump went in. It powers up the existing radiators and is working extremely well.
Oh and if you want to put a stop to running condensation on windows, damp and mould, get a handyman to install a Nuaire PIV (Heat) ventilation unit. Clothes then actually dry when they come out of the washing machine and towels dry after a bath - all year round.
It's all common sense and really not difficult to improve the long-term quality of UK rental units.
I’m always interested in your posts. My only concern is regarding the actual age of some of your portfolio. We have several properties that will only reach D ( not many) and like you I’m not against investing and future proofing our own portfolio
What’s your view on these type of properties
Logorrhoea time again!!!!
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