EPC regulations could drive older properties out of the rental market

One leading landlord organisation is warning that older properties without EPC exemptions could see half of the private rented sector’s homes disappearing from the market.

In an exclusive interview with Property118, the chief executive of iHowz, Peter Littlewood says “EPCs are a blunt instrument” when it comes to rating energy efficiency and makes it almost impossible for older properties to reach an EPC C rating.

Peter emphasises that the government needs to find a balance between tenants’ and landlords’ rights, and iHowz is actively lobbying MPs to support its Landlord-Tenant Partnership Bill.

iHowz started back in 1974

Landlord organisation iHowz, started back in Brighton in 1974 and is now celebrating 50 years of helping landlords.

Since then, they’ve been working to represent landlords’ views at both local and central government, while also helping landlords run their businesses.

Peter explains: “We also started separately in Southampton as well and merged and became the Southern private landlord association.

“After a vote in 2007, we merged with what was then the NLA, but many members expressed they didn’t want to merge we then restarted as the Southern Private Landlord Association. However, we kept being confused with the NRLA and NLA, which led us to eventually rebrand as iHowz.

“The ‘i’ stands for information, ‘how’ is about guiding you, and ‘howz’ refers to housing. We see ourselves as a campaigning group, keeping our members informed and making sure their voices are heard by those in charge.”

EPC system is a blunt instrument

Peter used to be an EPC assessor and believes the system is a “blunt instrument” because it’s making too many assumptions.

He tells Property118: “EPCs on residential properties are a bit of a blunt instrument, as they make a lot of assumptions—like how long the property will be lived in or how long the lights will be on.

“As an assessor, you’re looking at things like heating systems, energy use and potential leakage. Currently, if you make changes that save money, it improves the EPC rating.

“However, when the new EPC system comes in, it will likely focus on reducing carbon. The key difference is that while gas heating is currently favoured over electric, the new system is expected to flip this, favouring electric over gas.”

The Home Energy Model will be for new properties only but could be extended to the private rented sector.

Impossible for some properties to get an EPC C rating

Peter believes the current EPC system is unfair and outdated, particularly for older properties.

He says: “Yes, I do believe the EPC system is unfair and outdated, but the problem is to put a proper decent system would probably involve a whole day on each property which would substantially increase the costs.

“The current EPC system makes certain assumptions, allowing for comparisons between properties. However, it’s problematic when it tries to estimate the bills for a property. For commercial properties, it’s a bit different; you measure window sizes, which isn’t done for residential properties.

“Trying to get a decent EPC rating it all depends on the type of property. For example, if you’ve got a detached property in the middle of Dartmoor it’s always going to be a low rating whatever upgrades you make to it.

“If you’ve got a city flat surrounded by other flats you are always going to get a good rating.

“I think what the government have ignored is the fact that for some people it will be impossible to get to an EPC C rating.”

“Hopefully, the government keeps an exemption database so you can say I’ve done everything I can do the property is still an E I need to claim an exemption.

“If the government don’t do that then this is a real guesstimate, but it could take half of the properties out of the private rented sector which would be a nightmare —where would people go?”

Landlords need to meet EPC C targets by 2030

Ed Miliband has announced that private rented sector properties need to meet EPC C targets by 2030.

However, Peter says the government is “putting the cart before the horse” and not giving a detailed plan to landlords on how private rented sector properties can meet EPC C targets.

He explains: “The problem is there is talk of a new EPC system, so they are putting the cart before the horse.

“In other words, if I refurbish a property today and install a gas boiler, but the new EPC system comes in tomorrow saying I should have used electric heating.

“The government needs to introduce the new EPC system first, so landlords know what’s required before being judged by new standards.”

iHowz has written to various government departments over the last five years to get clarification for landlords on energy-efficiency standards.

He said: “We’ve written to the government several times over the last five years stating this but the problem we’ve had is the merry-go-round of housing ministers.

“It doesn’t help as well that EPC and Minimum Energy Efficiency Standards (MEES) come under different departments it should all be one department.”

The Department for Levelling Up, Housing and Communities (DLUHC ) is responsible for EPC ratings in buildings and the Department for Energy Security and Net Zero is responsible for MEES.

Decent Homes Standard is vague

Peter says the government must give a detailed plan to landlords on how they can improve energy-efficiency standards rather than a broad and vague plan.

He said: “The Decent Homes Standard seems to be something every landlord will have to follow, and in principle, we don’t have an issue with it—but putting it into practice is another matter.

“Right now, the Decent Homes Standard is extremely vague. It says a property must be ‘fit to live in’ and should have adequate facilities, but that’s too broad. It needs to be rewritten to include specifics like energy efficiency and heating. Everything needs to come together as one cohesive standard.

“We haven’t had a government since the 1950s that’s tried to integrate all aspects of property standards.

“We are trying to say to the government that you need to look at everything as a whole, not at bits.”

Tenant-Landlord Partnership Bill will help PRS

iHowz is presenting proposals to MPs and Lords on what the rental sector needs, including a new Tenant-Landlord Partnership Bill.

Some of the key measures include removing the surcharge on Capital Gains Tax for landlords and eliminating the additional Stamp Duty charged on any extra properties they purchase.

Other proposals include setting up specialist housing courts and the formation of a property register for all landlords with a Redress Scheme for complaints by tenants (with refundable fee) as an alternative to licensing.

Peter explains: “We see ourselves as both a landlord and tenant association because our belief is that if you’re a landlord, you’re running a business, and your tenants are your clients.

“You want to keep your clients happy and ensure everything works smoothly, but if you have a bad client, it’s a different story—you no longer want to deal with them.

“We do stress that the vast majority of tenancies are absolutely fine, only about 2-3% go to court.

“We believe all landlords should be trained and accredited before they are allowed to run a business like this.

“We would also like tenants to do a training course and accreditation to show what they have to do such as report problems and pay their rent on time.”

Discuss the Landlord-Tenant Partnership Bill

iHowz recently met with MPs to discuss the Landlord-Tenant Partnership Bill but believes there’s a lack of genuine commitment to addressing the issues.

He said: “They pay lip service to it because the problem with the government is they are always looking at the next election.

“They’ve only got the first year of a five-year period to do something controversial. It’s a feeling that most tenants vote more than landlords.

“The point we are trying to make to politicians is, if you want to say all landlords are nasty people and you want to get rid of them, we understand that. We’ll go and find something else to do, but then suddenly, 20% of the population will have nowhere to live.

“The government hasn’t made significant progress on housing, especially social housing. Once again, they’ve put the cart before the horse. The reality is, that both the government and local authorities need private landlords—it’s just a matter of us all working together sensibly.

“We’re also starting to compile a list of the unintended consequences from existing and proposed legislation so MPs can see the bigger picture.

No one should own property

Peter believes the government does want to make the private rented sector better but due to a mixture of conflicting views and short-term thinking, they’re not going about it the right way.

Peter says: “Yes, they do want to make the private rented sector better but not in the way we would do it.

“The problem comes if you get a far-left politician or a far-right politician they have such opposing views.

“I have had it quoted to me by very far-left politicians that no one should own property—that it should be divided out like it was in communist Russia—while a far-right politician believes everything should be in private hands.

“One thing that often gets overlooked is that when a landlord is willing to take their own personal risk to provide housing for someone, it’s their way of earning an income. They bear the risk of the property being damaged and facing rent arrears. All of this is done at the landlord’s risk, not the government’s.

“The only answer is if they want to get rid of the private rented sector is to triple the supply of council and social housing and for the government to take the risk, but they will never do that.”

Future of the private rented sector

Peter says the future of the private rented sector looks bright if landlords become more professional and receive proper support.

He says: “I return to the point that all landlords should be accredited, and then I do see a bright future. The problem arises when there’s a very small minority on the fringe who don’t know what they’re doing; they either need training or should hand over their properties to an agent who is also trained and accredited.

“The whole industry needs to tighten up and become far more professional and to know what they are doing and that’s a two-way business.”

Peter adds Section 24 has been particularly unfair to landlords.

He said: “The government needs to recognise that it is a business and allow it to be taxed as such. For instance, Section 24 restricts landlords from fully deducting mortgage interest from their taxable income, which is detrimental to the sector.

“It’s like if Tesco couldn’t claim the money, they spend on goods they place on the shelf; they would go out of business.”

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