A bank boss says landlords are facing a crisis of affordability when it comes to meeting strict new energy efficiency targets imposed by government.
The Westminster government has yet to respond to a consultation it held in 2020 on how to boost rental sector energy efficiency, but a draft strategy includes a ‘preferred policy scenario’ for new tenancies to have an EPC rating of C or above by 2025, extending to all tenancies by 2028.
However Mike Feasey, relationship director at the Secure Trust Bank, is warning that landlords and investors are in an increasingly difficult position.
He says: “We’re getting a lot of feedback from private landlords that high costs are proving a barrier when considering the benefits of upgrading their property’s energy efficiency credentials.
“The government is piling on the pressure by proposing that all rented homes should fall into the A-C bracket for new tenancies by 2025 and for all tenancies by 2028, but the cost of upgrading is becoming more expensive by the day.”
Official measures of material costs show a high degree of volatility across all material categories, while private landlords also need to factor in the increase in labour costs for tradesmen to complete any upgrades to their properties.
However, Feasey says doing nothing is not an option., adding: “The clock is ticking, and costs can quickly rise through inaction. The cost of retrofitting existing buildings with green and sustainable measures will, in all likelihood, continue to rise and make it more difficult to recoup the cost of that investment throughout the remaining life of a property.”
With currently over half of the homes in England rated D or below for energy efficiency, he believes there are options for private landlords and investors - residential investment loans for investors to acquire or maintain existing stock, or the release of equity to fund further energy efficient residential projects.
“Doing nothing is not an option because the danger is that landlords and investors will be left with properties that cannot be let and may prove difficult to sell” he concludes.
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