Insight and events

The recent reports that landlords will now have until 2028 to get their properties up to an energy performance certificate (EPC) rating of at least C is good news for those who were worried about how they were going to meet the previous proposals.

Under the original plans, landlords would have had until 2025 to achieve a C rating for newly-let rentals, and until 2028 for all other rented properties. However, after warnings that the target was unachievable and risked forcing more landlords to sell up, the government appears to have relented and put the target date for back.

While it may seem a while away, there are large numbers of landlords already thinking about the effect of this legislation on their portfolios and looking for guidance on what to do next. According to our Landlord Leaders research, conducted at the end of last year, 68% of landlords say they have or will invest ahead of potential EPC legislative change*; if landlords are thinking about this, brokers need to as well. 

In order to match landlord demand for guidance around EPC legislation, brokers have a central role to play in ensuring their clients are fully aware of the timeline and opportunities available to them when thinking about EPC ratings. Below are my five opportunities for brokers to consider when it comes to advising their clients on upcoming EPC legislation.

1. Refinancing portfolios

For landlords looking to refinance their portfolios, there is an opportunity to get ahead of the game and factor in potential costs for EPC upgrades. The Landlord Leaders research showed that 72% of brokers feel well equipped to support their clients in financing EPC changes, whether that be through landlords’ ongoing budget (38%), releasing equity from their portfolio (30%) or selling properties to free up capital reserves (20%). Brokers who research and understand the legislation and what is needed will be uniquely placed to advise clients and put EPC upgrades at the centre of the refinancing process.

2. Regular maintenance programmes

Landlords that regularly maintain their properties, and keep them maintained to a high standard, are sought after and have a competitive edge. Brokers who understand that regularly maintaining properties is a financial and reputational advantage will do well to instil this in their clients. Regular checks can help to protect an asset, and installing features like double-glazing and led-lights, for example, are likely to mean those landlords come out on top ahead of the legislative deadlines. 

3. Buying HMOs

There are certain instances where landlords factor utility costs into monthly rental payments from tenants, and in the current environment, with energy costs so high, this could mean landlords are losing money. ‘Bills included’ is popular for landlords with student accommodation, for instance. Therefore, landlords investing in more efficient, energy-saving products will get more value for money with bills-included rental agreements.

Brokers who service this kind of client will need to be able to give specialist advice around weighing up their options, especially when it comes to installing energy-efficient products to help improve EPC ratings. 37% of landlords polled in our Landlord Leaders research said that tenant affordability due to the rising cost of living was their key concern at this time; brokers should take this into account when talking to their clients.

4. Student accommodation

For those brokers with landlords looking to diversify their portfolios and brokers who see the great opportunity this brings for clients, student accommodation or other modern buildings with top EPC ratings could be considered a good option. Modern buildings with higher EPC ratings could now make better investments going forward, given the EPC legislation. Brokers should be clued up on the potential of these investments for their clients and make them aware of the benefits of diversifying in wake of the EPC changes. Brokers can help landlords improve their earnings prospects by placing them ahead of the curve. 

5. Government grants

Finally, there may be financial incentives announced by the Government to help landlords upgrade their properties - although there is a big question mark over what this could look like and whether we will actually see it announced. There is an argument for brokers waiting to see what the government says on this front in order to understand how to help their clients best. Although there is always a risk in waiting and brokers should be led by the needs of their individual clients. 

There are opportunities for landlords to keep in mind ahead of the EPC legislation, and brokers should be clued up on these. Brokers need to be a constant source of information and advice about present and future changes to EPC regulations to make sure their clients are compliant and capitalising on the opportunities available to them.

*https://landlordleaders.osb.co.uk/