New research from Zero Deposit reveals that private landlords across the UK may need to spend a staggering £21.455bn to upgrade rental properties to meet the proposed EPC C rating by 2030. This financial burden comes as part of Labour’s plan to raise energy efficiency standards in private and social rented homes.
Massive upgrade costs for landlords
Ed Miliband has committed to consulting on raising the minimum energy efficiency standard for rental properties, requiring a minimum EPC rating of C by 2030. Currently, properties need to meet a minimum EPC rating of E. However, Zero Deposit’s research shows that 55% of privately rented homes in the UK fall below this proposed standard, with many sitting at D or lower, and around 12% holding E, F, or G ratings.
Regions like Yorkshire and the Humber are particularly affected, with 74% of privately rented homes needing improvements. Similarly, the West Midlands and East Midlands also have high proportions of properties requiring upgrades at 65% and 62%, respectively. On the other hand, London has the lowest percentage of homes rated D or below at 38%, but landlords in the capital will face the highest costs.
London landlords hit hardest
The research estimates that the average cost to upgrade a property to a band C EPC rating is £8,000. With over 2.68 million homes needing improvements, landlords nationwide are looking at a collective bill of £21.455bn. In London, the cost is even higher, averaging £9,000 per property, which means landlords in the capital could be facing a total of £3.798bn in upgrade costs by 2030.
Even in regions where the costs are lower, such as the North East, landlords are still expected to spend a total of £666.6m to meet the new EPC standards.
Concerns over mounting costs
Sam Reynolds, CEO of Zero Deposit, expressed concern about the financial strain these upgrades will place on landlords, particularly given the series of recent legislative changes. “Our new Labour Government has been quick out of the blocks with respect to rental market reform, with the Right to Rent bill widely focused on the welfare of tenants, with little consideration for those who provide the rental accommodation we so sorely need,” Reynolds said.
While improving energy efficiency in rental homes is a positive step, Reynolds emphasised that the mandatory nature of these upgrades could be overwhelming for many landlords. “The latest move to make an EPC rating of C mandatory by 2030 is much the same in this respect… Yet another cost incurred due to legislative changes will likely leave a bad taste in the mouths of the nation’s landlords, and it could well be the final straw for many who are sat on the fence as to their future within the sector.”
Impact on the rental market
As landlords grapple with these significant costs, there are concerns about the long-term impact on the private rental sector. With many already facing rising maintenance costs, inflation, and other regulatory burdens, these new EPC requirements could push some landlords to exit the market, reducing the availability of rental properties at a time when demand is high.
For UK landlords, meeting the 2030 EPC targets represents a significant challenge. As the rental market continues to evolve under new government legislation, landlords will need to assess their portfolios and plan for the necessary improvements to avoid hefty penalties while balancing their long-term investment strategies.
