Why advisers still need to be on the ball regarding minimum EPCs

Amongst the landlord community, I suspect there will be few tears shed having heard the news that the Government is no longer looking at a new minimum EPC Level of C for all private rental sector properties from 2025/2028.

In the lead up to the announcement there were hints that the focus on landlords being the first ones over the top again for such measures was going to be pared back, and I think there would be few PRS stakeholders who wouldn’t have agreed that the continued cost increases being placed on landlords did need to, at the very least, be paused.

However, there has to be a degree of confliction when looking at this decision and, in my view, the benefits this measure could have brought.

First up, I would like to point out that rather than a ‘scrapping’ of these measures, we are led to believe the current Government has simply put them on pause. You might also add they have been on pause for some time anyway.

We have talked a lot about minimum EPC levels for a number of years, and the fact we never quite got full clarity on what would actually be required, perhaps tells you a lot about the level of priority that was placed on this.

And yet you can’t somehow think that a focus on improving energy-efficiency within PRS properties was the right one, especially given the cost of utility bills we’ve seen in recent years and that, a focus on reducing carbon emissions from UK property would also be the right call. Whether the EPC is the right method by which to measure this, however, does remain a moot point.

But, to add to the point, those who think this type of measure is now a dead duck and will never become law, should probably reconsider. I’m not expecting this Conservative Government to introduce it, but for example, should Labour win the next General Election, then I think this will be very much back on the agenda and therefore a degree of preparedness for that should be in place.

After all, there has been some suggestion that we could have an election in the Spring next year recently – perhaps even earlier – however my own belief is that it’s not likely to take place until towards the end of 2024.

That aside, while we now don’t have that cliff-edge timescale to work towards – and I think most landlords would be pleased at this – I would be surprised if we didn’t have a deadline reintroduced in say 2025, but for later in the decade for compliance. Perhaps 2026/2027 - although that is pure speculation on my part.

Plus, and this is one for those dealing with cases north of the border, it is my understanding that the Scottish Government is keeping to its own 2025 new tenancy/2028 existing tenancy deadline for EPC level C and therefore this is something which will need to be factored in. Fleet, of course, does not lend in Scotland.

But, as mentioned, even without specific Government mandation in this area, the notion of improving energy-efficiency in the PRS still seems like a very good idea to me. And there will undoubtedly be landlords who continue to look at their current EPC levels, how they improve them, and how they pay for their improvements.

To that end, advisers in my opinion will still need to be on the ball in this area. Not least of course because lenders like ourselves will continue to offer ‘Green’ products – we certainly have no intention of pulling our product range for those properties already at a C level, and of course we continue to offer £1,000 cashback to those landlords who improve their EPC level to C or above during the course of their initial fixed-rate period.

So, there are some incentives for landlords here, doubly so in this case. Not only can they benefit from a cheaper rate by having a property at EPC level C, but they can also secure money to offset the costs of having the work done.

In the overall scheme of things, having a property at this level seems to be a positive goal to try and achieve. Now, admittedly, there can be a cost here and for those properties which are right down the EPC scale, that cost is going to be greater. But, certainly, the sooner that work is carried out, the quicker the landlord borrower can benefit from these incentivised rates, which over the long-term will also save them on their monthly mortgage payments.

No-one believes this has gone away as an issue that needs addressing, even if the Government has rowed back. Therefore, my advice would be to utilise the extra time provided here, but make sure your landlord clients are on top of this, because there’s a huge likelihood that these requirements will be back before we know it.