A recent survey by mortgage lender Foundation Home Loans indicates that a large number of UK landlords are preparing to raise rents to offset the costs associated with upgrading energy performance in their properties. Conducted in September and October, the survey revealed that over two-thirds of private landlords own at least one property that doesn’t yet meet the new Energy Performance Certificate (EPC) ‘C’ standard, required under proposed government guidelines to enhance energy efficiency and reduce fuel poverty.
Foundation Home Loans found high awareness levels among landlords about EPC regulations, with 92% expressing at least some awareness, though only 67% felt they fully understood the requirements. According to the survey, larger portfolio landlords—those with four or more buy-to-let mortgages—showed slightly lower understanding at 62%, compared to 69% of single-property owners and consumer borrowers.
Mixed strategies for property compliance
Many landlords intend to take steps to meet the EPC standards: 42% say they’ll make the necessary improvements to upgrade their properties to a ‘C’ rating. Another 24% plan to conduct only the minimal work needed to comply, while 14% aim to make upgrades that will enhance their properties’ long-term value. However, not all landlords are willing to make the investment—3% plan to sell their upgraded properties, and 34% are considering selling outright without making any changes or plan not to re-let.
Some landlords are also weighing up different financial strategies to fund these upgrades. According to the survey, 41% of landlords will raise rents to cover the cost of improvements, while 28% plan to apply for grants. Others, like 12% of respondents, said they would release equity from their portfolio, and 5% would take a loan or seek additional mortgage financing.
Impact on tenants as rent hikes loom
For tenants, these EPC requirements may translate into higher rents, especially as landlords seek ways to fund these costly upgrades. A Foundation Home Loans spokesperson noted, “With potential new legislation aiming to raise energy efficiency standards and tackle fuel poverty for millions, landlords face important decisions around future-proofing their investments from an EPC perspective.”
Some landlords are calling for more support from the government to offset these costs, citing financial strains associated with upgrading multiple properties. As one private landlord in the survey expressed, “Meeting these standards while keeping rents fair is difficult, particularly with the limited financial options available. Grants and green mortgage products can help, but there’s still a funding gap.”
Could green mortgage products ease the burden?
With these upcoming regulatory changes, lenders and mortgage intermediaries are eyeing opportunities to support landlords. Foundation Home Loans’ spokesperson suggested that tailored green mortgage products could be key, saying, “The tremendous potential for lenders and intermediaries to support sustainable practices in the buy-to-let sector through tailored green mortgage products that align with both regulatory demands and landlords’ unique needs is increasingly clear.” However, for landlords weighing up the costs and for tenants facing potential rent hikes, the journey to compliance with EPC regulations presents both challenges and uncertainties, raising questions about the long-term impacts on the UK rental market.
