Two-thirds of landlords lack EPC C rating as many plan rent hikes for upgrades

Two-thirds of landlords currently own at least one property that does not have an EPC C rating, according to Foundation Home Loans.

Data from the mortgage lender shows that nearly half (42%) of landlords plan to raise rents to cover the cost of energy-efficiency improvements.

This comes after Ed Miliband announced that all private rental properties must meet EPC C standards by 2030.

£12,000 per property to achieve an EPC C rating

Foundation Home Loans reveals many landlords (37%) are confused about the cost of upgrading a property to meet energy-efficiency standards.

According to the mortgage lender, landlords could face an average cost of £12,000 per property to achieve an EPC ‘C’ rating.

To reach these targets, some landlords plan upgrades such as solid wall or floor insulation (37%), loft insulation (26%), boiler or heating system replacements (25%), and solar PV panel installations (22%).

According to the research, awareness of EPC standards is high, with 92% of landlords having at least some knowledge of the requirements.

However, only two-thirds (67%) report a thorough understanding of the details. Portfolio landlords with four or more buy-to-let mortgages demonstrate slightly lower comprehension of the potential regulations, with 62% stating they fully understand the requirements compared to 69% of unencumbered and consumer borrowers.

Just over a third of landlords plan to sell

When it comes to meeting these EPC standards, 42% of landlords intend to make the necessary improvements to bring their impacted properties up to EPC C standards.

Within this group, 24% intend to complete the necessary work at minimum cost to remain compliant and keep renting the property, while 14% are aiming for upgrades that will maximize the property’s long-term value and continue letting it out.

For those who plan to carry out the necessary work, most expect to fund the improvements through savings (71%), rent increases (42%), or government grants/funding (28%), with a further 12% saying they would release equity from their portfolio and 5% seeking a further advance from a mortgage lender or a loan (5%).

However, just over a third of landlords (34%) plan to sell without undertaking any energy-efficiency improvements.

Landlords face important decisions

Grant Hendry, director of sales at Foundation Home Loans, said: “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.

“Thankfully, this research helps demonstrate growing awareness among landlords around this topic and highlights both the financial and planning considerations involved in meeting these requirements.

“It also underlines the tremendous potential for lenders and intermediaries to support sustainable practices in the buy-to-let sector, particularly through tailored green mortgage products that align with both regulatory demands and landlords’ unique needs”

Mr Hendry adds: “As landlords adopt varied approaches to meet these standards, ranging from minimal-cost upgrades to comprehensive property improvements, it’s clear that personalised guidance is essential. Green mortgage solutions can offer landlords a strategic way to finance these upgrades, enhancing property value and reducing long-term costs.

“For lenders and intermediaries, these conversations not only strengthen client relationships but also broaden the scope of services in a sector increasingly focused on sustainability.”

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