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Almost five million rental rooms could be hit by new energy efficiency legislation

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
18/04/2023

Around 4.7 million rental rooms across the UK are in properties with an EPC rating of D or below, potentially putting them at risk of being unlettable or sold by the landlord.

According to market research firm Outra, around 1.9 million of these rooms are located in London alone, putting capital-based tenants at a particular risk.

Upcoming EPC legislation could mandate that all tenancies should have a minimum rating of C by 2028, however this is not yet law and rumours have abounded that there could be delays to this becoming law.

Current legislation mandates that rental properties in England and Wales should have an EPC rating of E or higher prior to be letting.

The bill is currently on its second reading in the House of Commons.

The government has previously said that it would cap the maximum spend to upgrade a property to around £10,000, regardless of whether an EPC rating of C is achieved.

Outra said landlords could face a cumulative bill of £45bn to upgrade their properties to the bare minimum standard.

Buy-to-let sector ‘looking less attractive’

Phil Tennant, COO of Upstix, a cash buyer of homes and sister company of Outra, said: “Rental growth remains robust, storm clouds are on the horizon for buy-to-let investors. With higher interest rates eating into profits, even as average rents continue to increase, the sector is looking markedly less attractive as we move further away from historically low rates.

“The real danger lies just around the corner in 2028, when all residential lettings need to meet a minimum EPC rating of C. For many small landlords, finding the cash to upgrade their properties in today’s tough environment may be the straw that breaks the camel’s back.”