Government must rethink PRS policy to hit 2028 EPC target

 

Landlord representative body Propertymark has renewed calls for the government to take measures to tackle the proposed EPC target in the country’s rental homes.

As many as 40% of homes in the private rented sector (PRS) are unlikely to attain a potential EPC target score of ‘C’ by 2028, according to Propertymark after an analysis of the English Housing Survey. 

Should the minimum energy efficiency standard (MEES) be raised in the coming decade, as predicted, this means a major shortfall in adequately energy efficient homes in the sector.

The group points out that, in the eight years to 2020, the number of PRS properties with an EPC rating of C increased from 19% to 39%. If the sector continues in the same vein, this could rise to 60% in the next eight years.

Is the EPC target achievable?

Alongside the government’s 2050 net zero targets – which have been the subject of some debate in the ongoing Conservative leadership contest – is a proposed EPC target aimed at improving the energy efficiency of the PRS.

At the moment, all homes in the sector must score E or above in their energy performance certificates (EPCs). Homes that don’t meet this standard cannot be rented out, or certain exemption criteria must be met.

But a draft consultation from 2020 set out a ‘preferred policy scenario’ raising the EPC target to C from 2025 for new tenancies, and from 2028 for existing tenancies, says Propertymark.

It adds: “A Private Members’ Bill with the same requirements was introduced by Conservative MP Sir Roger Gale in May 2022, which has reached the second reading stage.”

But with 4.4 million homes now in existence across the PRS, accounting for 19% of all housing stock in the UK, the government must take the projected shortfall in EPC standards seriously, argues Propertymark.

“This is against the backdrop of the huge sums of money it has had to commit in the short term to help householders with their rising bills amid the cost-of-living crisis,” it adds.

A long way to go

Timothy Douglas, head of policy and campaigns for Propertymark, commented: “We knew it would be a huge challenge for the PRS to achieve the proposed 2028 target because the owners of rental properties will not directly benefit from lower energy bills, so where is their incentive?

“The data in the English Housing Survey shows just how far there is to go.

“The new UK government should take heed of this projected shortfall if it is serious about net zero, and against the backdrop of the huge sums of money it has had to commit in the short-term to help householders with their rising bills amid the cost-of-living crisis.

“Our member agents are already seeing rental properties disappearing from the market for a variety of reasons and there is a real danger more could go with the EPC rating target hanging over them.

“Propertymark supports moves to improve the energy efficiency of property types and will continue to lobby for a national retrofit strategy with realistic, fair and achievable targets alongside dedicated, long-term grants that consider each property’s individual characteristics.”

Investment strategies are already changing

Research from Hamptons has discovered that property investment trends are already leaning towards buying more energy-efficient properties in advance of EPC target changes.

According to the agency, the start of 2022 has already seen around 50% of investors buying properties rated A-C in their energy performance certificates. This is the highest figure ever recorded, and 11% higher than was seen in 2021. In 2020, just 33% of landlords bought top EPC-rated homes.

New-build properties tend to have the highest energy-efficiency ratings, and it seems there’s been an increase in property investors buying brand-new homes. Others are choosing to buy properties that have been brought up to a higher standard through renovations, says Hamptons.

One upside to this, aside from the environmental benefits, is the money saved by tenants on their bills. According to the research, if all homes in the PRS with EPC ratings of G-D became at least C-rated, tenants in England would save a cumulative £844m in energy bills per year.

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Government must rethink PRS policy to hit 2028 EPC target

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