Are you aware of the proposed EPC regulation changes? If you answered no, then you are not alone!
Read on to find out more about the changing regulations and how West One can help landlords comply.

What are the current EPC regulations?

Since 2018 new and existing tenancies have been required to have an EPC rating of ‘E’ or above; with a penalty of up to £5,000 in place for those properties that do not meet the requirements; this however is set to change.

What are the proposed changes?

From 2025 all new tenancies will be required to have a valid EPC rating of ‘C’ or above. From April 2028, this rule will be applied to all existing tenancies.
The penalty for those properties that do not comply or have a valid exemption will rise, up to a maximum of £30,000.

What is the impact of these changes?

It is estimated that currently around 40% of rental properties have an EPC rating of ‘D’ or lower. To put that into perspective, in 2008 just 9% of homes had an EPC rating of ‘C’ or above, it has taken 14 years for this to rise to 46% in 2022.

A recent report from Habito estimated that the average cost of updating an EPC ‘D’ rated property to a ‘C’ rating is £6,155. This will fluctuate depending on the type of property with Habito’s analysis finding that it will cost roughly £3,653 to upgrade a one-bedroom flat, however for a larger detached property the cost of improvements is likely to be closer to £12,540.

While the improvements of rental properties and the subsequent benefits to the environment are to be applauded, there are concerns about the costs of the required works, particularly for landlords with large portfolios, and the impact on the buy-to-let market. One such worry is that some landlords will choose to sell off their properties rather than finance the upgrades – impacting the number of available quality rental stock. A recent survey found that as many as 52% of landlords that own a property with an EPC rating of ‘D’ or lower have considered selling their property.

How can bridging finance help landlords?

A bridging loan can be used to finance upgrades to a property that does not require planning permission, such as the installation of new windows or doors or the installation of a new central heating system.
Once the work has completed, the landlord can exit the bridge onto a new buy-to-let mortgage, with many lenders, including West One, offering green mortgages with preferential rates for properties with an EPC rating of ‘C’ or above. A bridging loan could be a good option when the required upgrades can be completed in under 12 months.