Research provided by the BPF and Energy Saving Trust has shown that the cost of improving a typical F rated property to an E rating - which is likely to be the minimum standard for private rentals from 2018 - ranges from just £100 up to £660. However, improving the property to the highest possible EPC rating could cost almost £20,000.
With December's census revealing home ownership had fallen for the first time since records began and the number renting from a landlord doubling to 3.6 million homes, improving energy efficiency in the private rented sector will be key in helping to meet the Government's climate change obligations.
With this in mind the British Property Federation and the Energy Saving Trust today published a free guide explaining how landlords can plan and fund improvements to help ensure their investment will be lettable from 2018.
To meet the Government's energy efficiency rules, the guide reveals a typical:
one bedroom Victorian mid-terrace converted flat will cost £659 to improve from an F to an E rated EPC, but £11,182 to improve from an F to a C rated EPC;
two bedroom 1970s flat will cost £150 to improve from an F to an E rated EPC, but £14,927 to improve to a C rated EPC;
two bedroom end-terrace Victorian house will cost £245 to improve from an F to an E rated EPC, but £19,586 to a B rated EPC (excluding earnings from feed-in tariffs);
three bedroom mid-century semi-detached house will cost £100 to improve from an F to an E rated EPC, but £13,154 to improve to a B rated EPC (excluding feed-in tariffs).
Thomas Younespour, Senior Policy Officer, British Property Federation, said:
"The importance of a property's EPC rating is likely to increase in the coming years. Not only have the rules been tightened over the provision and display of EPCs to prospective tenants and buyers, but regulations are planned for April 2018 to ban the letting of property with the poorest ratings - likely to mean F and G rated property.
"The details of such regulation are yet to be set out, but nonetheless indicate clear intent. It is often during void periods that improvement works can best be undertaken and therefore landlords are advised to consider sooner rather than later the energy efficiency of their properties and prepare a forward plan for works."
David Weatherall, Housing Strategy Manager, Energy Saving Trust, said:
"With electricity and gas bills seemingly always on the rise, tenants are increasingly looking to rent properties that are cheap to heat. So it's good landlords can access new sources of financing to improve wall insulation, windows and heating systems at no upfront cost. The Energy Saving Trust are delighted to have collaborated with the British Property Federation to produce a new landlords' guide that gives all the important information about making and paying for energy efficiency improvements."
Paul Winstanley, Partner, Allsop LLP, said:
"Efficient energy performance will be increasingly relevant to the residential property industry as a whole, with minimum standards required from April 2018, the impact of compliance on landlords should not be ignored.
"On the road to 2018, it is an important step forward for our industry to see a dedicated residential investment publication launched. This document begins to address the potential implications of this issue on the market"
Chris Paul, Partner, Trowers & Hamlins LLP, said:
"The Energy Act has significant implications for the sector, with regulations empowering tenants to request energy efficiency improvements and making it illegal to let properties below a certain energy performance rating. Well advised landlords should consider their strategy at an early stage - and the BPF guide identifies suitable support to help landlords fund the necessary energy efficiency improvements."
