Simon Harrison, Lettings Manager, recently attended the PropertyMark Annual Conference in Newcastle and whilst picking up on various financial and legal implications that will impact on the sector through the back of 2023 and into 2024 it was the subject of EPC changes that buzzed around the room.
Amongst a flurry of media the following week saw environmental targets changed across several sectors including the property market – the outfall of which is still being hotly debated.
Originally proposals had been laid out so that landlords would be required to ensure their property portfolios had EPC ratings of C or higher for all new tenancies commencing in 2025 with the further step that all properties with existing tenancies would need to meet this requirement from 2028.
Undoubtedly, landlords with properties significantly below the C threshold would have needed to set out a programme of refurbishments for affected properties both costing time and funds to both carry out and of course potentially seeing void periods if substantial works were required.
What happens if they didn’t meet the targets – as recent as March 2023 the government the deadlines were changed so that all tenancies needed to be C rated by 2028 and upped the ante with penalties for non-compliance rising from £5,000 to a much more eyewatering £30,000.
There is no argument that tenants, in lieu of increasing rental costs, deserve properties that are both modern and efficient and even more importantly in some cases not harmful to health – there is no place in a professional private rental sector for ‘dodgy properties and dodgy landlords’. However, there will have been many respectable landlords with borderline properties along with increasing legislation that looked at the scenario ahead and simply decided ‘this isn’t for me’ and would have been considering stepping out of the private rental market.
Now, one statement on, and these changes have been scrapped with a much watered down statement that “the Government will encourage landlords to upgrade the energy efficiency of their properties where possible”.
The position now remains that landlords need to ensure their properties need to be EPC rated E as a minimum (this was the legal requirement brought in from 1st April 2020) with a cost cap of £3,500.
Most recently Michael Gove, the current Housing Secretary, spoke at the Conservative Party Conference on Tuesday 3rd October and delivered a statement that “every family should have a safe, decent, warm home and that many more young people should be able to own a home of their own” whilst going on to acknowledge that more must be done to ensure this can become a reality.
There were no specific mentions of EPC, no new initiatives for housebuilding at a time when development companies are scaling back due to reduced demand for new build properties and no new updates on the Renters’ Reform Bill.
What we take away from this is that supply is unlikely to increase both in the sales and rental markets and therefore whilst economic pressures will be softening demand across the market the demand across will only ease slowly unless the economic conditions change significantly.
For landlords, a property that is sound and well maintained is a capital asset that over the long term will increase in value – combine that with modern standards of expected living and a professional approach to property management and you will have an asset appreciated by good quality tenants that will pay its way.