Potential Financial Loss for Agencies Due to Poor Management of EPC Amendments
The private rented sector (PRS) in the UK is facing a significant transformation due to new energy efficiency standards. According to recent research, over 2.7 million homes across Britain will need to be retrofitted with energy-efficient measures to meet government targets by 2030 [1].
Ed Miliband, the Secretary of State for Energy Security and Net Zero, has announced that landlords will be required to raise the standard of their accommodation to a proper energy performance certificate (EPC) standard C by 2030 [2]. This mandate applies to both new tenancies from 2028 and all tenancies by 2030. The required upgrades, capped at £10,000 per property (unless exempted), could prove costly for many landlords [1][2].
With over 60% of PRS homes currently falling below EPC Band C, concerns arise that some landlords might sell rather than invest in retrofitting [1][2]. If this happens, the PRS could face reduced housing supply, increased rental competition, and upward pressure on rents.
Steve Richmond, General Manager at UK and Ireland Reapit, stated that the report reveals the sheer scale of the work ahead, while Neil Cobbold, Commercial Director of Reapit and PayProp, asserted that selling properties in the PRS will harm tenants [6].
The latest findings from a PayProp survey show that half of tenant moves last year were as a result of landlords selling, while only 4.1% of them planned to purchase more homes [7]. Encouraging landlords to reinvest in the PRS if they sell properties is crucial, according to Neil Cobbold [8].
Sales and letting agents are best positioned to advise landlords on industry trends and regulations affecting the PRS. However, they might experience market shifts affecting lettings and sales dynamics as a result of these changes [8].
The potential impact on estate agents includes increased sales activity due to landlords selling to avoid costs and more complexity in lettings as agents must navigate EPC compliance, licensing, exemptions, and advise clients about retrofit grants and legal risks [2][3]. Shifts in the commercial sector from related MEES regulations may also influence agencies handling mixed portfolios, including changes in lease terms and rent reviews [4][5].
Government support schemes, such as the Boiler Upgrade Scheme and Home Upgrade Grant, aim to alleviate some retrofit costs but are unlikely to completely offset the expenses or administrative burden for all landlords [1].
In summary, the push for higher energy efficiency standards is likely to reduce available private rental housing, increase rents, and alter landlord and agent behavior through more sales and retrofitting challenges. Estate agents face both increased transactional opportunities and regulatory complexities linked to these changes. This dynamic reflects a significant transformation in the UK housing market driven by environmental policy.
For more insights into the energy performance of the private rented sector in England, Wales, and Scotland, download the Reapit special report [9].
Investing in energy-efficient retrofitting in the real-estate industry becomes crucial for landlords to comply with government energy efficiency standards by 2030, as failure to do so could lead to reduced housing supply in the private rented sector (PRS). Due to the financial implications, some landlords might opt to sell their properties instead, potentially harming tenants and causing market shifts for sales and letting agents, who must now navigate complex EPC compliance, licensing, exemptions, and grant opportunities.
