Real Estate

Will you pass energy-efficient improvement costs onto your tenants as higher rent?

Below proposed rules, landlords could also be required to make modifications to their properties to enhance their Power Efficiency Certificates (EPC) scores to C or above.

The anticipated deadline to adjust to these rules is 2025 for all new tenancies, and 2028 for all present tenancies. However making the required energy-efficient enhancements could possibly be a pricey train for a lot of landlords, significantly these with older properties.

The landlords we surveyed estimated a median value of £5,900 to attain the required EPC score nonetheless, this determine could possibly be considerably underestimated.

Landlords who’ve already made the required enhancements to their properties have spent £8,900 on common, however wider market forces equivalent to labour prices and materials shortages may push this up even additional.

Move on prices

Of the landlords we spoke to* over half mentioned that they may cross at the very least a few of these prices onto their tenants in a bid to recoup a number of the cash they might want to spend.

Tenants in London are almost certainly to see an increase of their rents because of this, with 68% of landlords in London saying they’d share at the very least a number of the prices with their tenants.

Whether or not landlords improve rents right away or not, practically a fifth (18%) of landlords anticipate them to rise as a pure consequence of the brand new rules.

Finance choices

Whereas passing on a number of the prices to tenants could also be vital, discovering a cheap funding resolution, equivalent to bridging finance, may be worthwhile.

This funding may assist landlords make the required modifications forward of the deadline, relieving a number of the stress, and will presumably offset the prices that tenants would in any other case see. 

For landlords unaware of the extent of works required, what the related prices shall be, or what finance choices can be found to them, chatting with knowledgeable mortgage dealer or lender sooner slightly than later may assist paint a clearer image.

Learn Shawbrook’s Confronting the EPC Problem report

*Analysis Methodology

Shawbrook Financial institution contracted Opinium to undertake analysis between 18th and twenty fifth November 2021 to grasp landlords’ consciousness of the upcoming proposed modifications to the Power Efficiency Certification (EPC), which would require properties to be rated ‘C’ or above by 2025 in an effort to start a brand new tenancy. A complete 1,000 UK landlords had been surveyed.

Writer: Emma Cox, Managing Director of Actual Property, Shawcross Financial institution.

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