Landlords could boost profits with EPC upgrades

Landlords could boost profits with EPC upgrades

0:01 AM, 2nd January 2025, About 3 days ago 5

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With more landlords offering bills-included rentals, improving a property’s EPC rating could help boost profit margins, says epIMS.

The energy-efficiency platform claims that 14% of all current rental properties on the market offer the cost of bills included within the monthly asking rent – a jump from 12% last year.

The platform claims for those landlords offering a bills included rental, improving the energy efficiency of their property could help them lower costs.

Mandatory EPC C rating by 2030

Chief operating officer of epIMS, Craig Cooper, said: “Landlords have been hit by a string of legislative changes designed to dent the profit margins of their buy-to-let portfolio, not least the recent hike to second home stamp duty costs, so they can be forgiven for viewing the mandatory EPC C rating as yet another layer of unnecessary red tape to adhere to by 2030.

“However, with more and more landlords offering the cost of bills included within their asking rents, making EPC improvements now could see them boost their profit margins, as they could dramatically reduce the energy costs associated with their property.

“The good news is that you don’t need to completely overhaul your property to achieve an EPC C rating and we regularly find that it can be accomplished with one or two minor adjustments, rather than the radical changes often touted by the government.”

Reducing energy costs

According to figures from epIMS, the average property with EPC D rating has an average energy bill of £2,513. By upgrading to a C, it would reduce this cost by 29% or £717 per year.

Upgrading from an E rating to a C would cut the average energy bill of a property by 48% or £1,685 per year.

The average landlord with a F rated property could reduce the average energy bill by 61% or £2,838 per year.

For landlords with the worst-rated EPC rating of G, improving their property to just a C rating would save them a huge £4,240 per year, cutting their energy bill by 70%, and potentially saving over £21,000 over the next five years.


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Jason

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8:08 AM, 2nd January 2025, About 2 days ago

All bills included usually means tenants have the hot water and heating on 24/7. It doesn’t teach the tenant anything about energy saving as they’re not paying the bill.

Jo Westlake

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9:50 AM, 2nd January 2025, About 2 days ago

I'm a great fan of lots of eco stuff but the current tax system simply doesn't encourage landlords to embrace upgrades.
In a bills inclusive HMO gas and electric are fully tax deductible expenses. Eco upgrades are capital expenses. A new heating programmer would probably be OK as a replacement but a solar array would be a capital improvement. Presumably a heat pump would also be classed as an capital improvement upgrade at least as long as it is still legal to buy a replacement gas boiler.
In the early days of solar when the Feed in Tariff existed it didn't matter that it was a capital expense as the FIT made it financially worthwhile. Now it's a much bigger risk. A solar array will reduce electric bills but not necessarily by enough to fully cover it's costs in a reasonable timeframe. Throw in the fact it has to be paid for out of tax paid income and it really doesn't stack.

Cider Drinker

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15:17 PM, 2nd January 2025, About 2 days ago

According to my last remaining D Rated EPC (dated 2016), I should spend an average of £9,014 to meet an EPC Rating C.

This could save my tenants £256 per year. So, the investment would pay for itself by 2060 if I ignore the cost of money.

Or, I could buy 9,014 Premium Bonds. With an average luck, I’d earn £360 per year. I could give the tenants £256 towards their heating and keep £104 for myself. I’d also retain access to the capital.

Besides, Labour promised lots of green energy so it shouldn’t matter if I have panels on my roof or a windmill in my garden or if use energy from panels in farmers’ fields and windmills in wind farms.

John Grefe

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10:13 AM, 3rd January 2025, About A day ago

Jo Westlake& Cider Drinker: We have installed over the last three years; air source heatpump with solar for electricity & a storage battery. Costs thousands but the quality in the house is superior to the periodic cold spells before. The fabric of the house IS improved and reduces nearly to nothing mould etc. Those reasons reduces your costs tacking black mould ! Mainly, we have noticed about a 25% max. reduction in energy costs - shortens the pay back period. But , the main reason for carrying out this is to leave a healthier planet for our children etc.?

Freda Blogs

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12:23 PM, 3rd January 2025, About A day ago

Reply to the comment left by John Grefe at 03/01/2025 - 10:13
Sure, let's try and leave a healthier planet for our children, but should we be required to do this work at considerable capital expense for other peoples' children, thus diminishing the capital available to our own offspring, attempting to save tenants and their children minimal sums on utility bills?

EPCs were originally designed to save money but are now sought to (allegedly) achieve net zero, so the current methodology and measurements do not align, but the Govt is 'consulting' (again) whilst moving the goal posts for LLs. Who would invest in such an uncertain situation without knowing whether that investment will achieve the required objective?

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