An email from our Director, Rob Hill - The Importance of the EPC & Why you should act now!
As a landlord, should the new legislation on EPC changes be a concern for your investment? In short, the answer is yes.. read on to hear how you can act now and save money.
The energy performance certificate or EPC for short is the only survivor of the brief reign of the Home Information Pack (HIP). For many years it seemed like something agents had to arrange when marketing a property and solicitors had to make sure it was in date for conveyancing. Applicants had no idea or didn’t care as to what the colourful graph was or what it represented, if the property suited their wants and needs, they put forward an offer.
Over more recent years the EPC has accrued greater awareness amongst purchasers and renters and although I would state it still would not prevent an offer being put forward it is being brought into a more acute focus. The well documented rise in energy prices have led to applicants asking more questions about the EPC as perhaps more than in recent years applicants are acutely aware of rising costs. That said in the rental sector the shortage of properties has meant that while it is considered more it is not a sufficient enough concern to stop applicants making an offer.
So, it begs the question as a landlord should it be a concern for your investment?
The short answer is yes. It should be a major concern and one that should be carefully budget for in coming years.
As part of an ambitious plan from the government to reduce our collective carbon footprint the government plans to make it so landlords have to bring properties up to an EPC level of C for new tenancies by 2025 or 2026 as well as for existing tenancies by 2028.
On the face of it you could be forgiven for thinking this is not an ambitious target, but statistics show that the average EPC rating for every residential property built between 1930 and 1982 is D. So, there are thousands of properties that as it stands will not be able to enter into new rental agreements in potentially less than three years.
Perhaps equally concerning is that recent research from Shawbrook for landlords suggests that landlords who have upgraded their properties have spent on average £8900 thus far. Of course, there are tax reliefs available for green upgrades but it is still a costly endeavour and with spiralling inflation and a shortage of materials this cost is likely to increase. Perhaps as disappointing is that the improvements made will not necessarily result in higher rents being achieved.
We are witnessing many landlords deciding that this, the new regulations in relation to section 21 and the unfavourable tax changes as a reason to exit the market. Depending on your circumstances that may be the right choice and I always encourage all our clients to have regular sales appraisals regardless of if you intend to sell or not - it simply helps you plan.
But if you are keen to keep your property, what should you do to ensure you achieve the C and can continue to let out your property?
1 Lighting: Change all bulbs to LED’s
2 Better controls on heating systems, more thermostats even smart heating systems like HIVE
3 If you have a hot water cylinder, is it lagged?
4 Insulation. This could be loft, cavity wall, floor or ceiling.
5 Information on the property. This is key and often overlooked. An assessor will not put holes in walls to see if you have insulated etc. They will make assumptions based on the build type so make sure you supply every bit of information you have, it can often make the difference.
Low-cost improvements will be effective, but will they be sufficient?
In most case not and if you opt for the higher cost improvements you could spend thousands assuming you are making improvements only to find you are still a few points short of the required C. As with everything knowledge is power and for that reason, we have partnered with The EPC Provider (contactable on 020 8346 3555 / william@theepcprovider.co.uk) to identify what needs to be and approximate costings of the improvements.
For a discounted rate of £250 +VAT per property for all clients of GLP (Quote GLPEPC) they will;
1. Conduct a new EPC survey on flat. Not to be completed but in draft form.
2. Provide a report detailing different measures to bring the property up to the desired rating. Normally there will be a number of different approaches that will depend on personal choice, costs and logistics.
3. Once measures have been chosen and installed, they will re-visit the property to conduct a new EPC which will achieve the targeted C and be valid for ten years.
I would strongly urge all landlords and property owners in general to do this. From a landlord perspective this allows you to understand what needs to be done and to budget for it accordingly. Some of the works could be conducted with the tenants in situ and some of the others could be carried out in between tenancies.
Purchasers are looking at the EPC more and more and its importance is being highlighted by solicitors and bank valuers so knowing what needs to be done even if you are not planning on carrying out the work yourself will aid any sale. It is also worth considering what the potential impacts are of having a poor EPC for remortgaging purposes, will you be able to do so? Will you have access to better rates?
This is a real issue and one that the large property firms are tackling so now is the time to act. If this feels like the straw that breaks the camel’s back for you, now is the time to consider selling more seriously. As we edge closer to 2025 its impact on the value of your home will only expediate. If you plan to remain a landlord now is the time to understand what needs to be done and to budget accordingly.
As ever please do feel free to give us a call and we would be delighted to advise further.
If you would like a Sales or Rental Valuation, please give us a call on 0207 734 4062 or visit our website glp.co.uk.
Warm Regards
Rob Hill, Director
Greater London Properties