How New EPC Targets Could Shape the Rental Market and Cost Landlords Thousands

The UK’s private rental sector is on the brink of significant change, with new energy efficiency targets threatening to reshape the landscape for landlords, lettings agencies, and tenants alike. The Labour government’s plan to enforce stricter EPC standards by 2030 is a key part of its broader environmental strategy. However, these targets may have unintended consequences, particularly in the rental market, where the cost of compliance could lead to a significant reduction in available housing stock.

The Scale of the Challenge

According to a recent analysis by PropTech firm Reapit, the impact of these new regulations could be staggering. The firm examined 52,000 private rental properties across England, Scotland, and Wales, concluding that 2.7 million rental properties will require upgrading to meet the new EPC standards. This includes a substantial portion of the private rental stock currently rated below a C on the EPC scale.

The cost of upgrading these properties is estimated to be around £24.03 billion, with individual landlords facing an average bill of £10,442. However, this average masks significant variability; landlords with older, less efficient properties (those rated E, F, or G) could see costs exceed £14,000 per property. For many, this financial burden may prove insurmountable, especially if they own multiple properties that all require upgrades.

Potential Exodus of Landlords

Faced with these costs, a considerable number of landlords may choose to exit the market rather than invest in costly upgrades. Reapit estimates that up to 880,000 rental properties could be lost if landlords decide to sell properties that do not meet the new standards rather than undertake expensive upgrades. This represents a potential loss of over 17% of the current rental stock, a figure that could have profound implications for the rental market.

The impact of such an exodus would be felt across the sector. With fewer rental properties available, competition among tenants would likely increase, potentially driving up rental prices. This, in turn, could exacerbate the affordability crisis already affecting many parts of the UK. Moreover, the loss of a significant portion of rental stock could lead to increased pressure on local authorities and housing associations to fill the gap, placing additional strain on public resources.

The Financial Impact on Lettings Agencies

Lettings agencies would not be immune to the fallout from a mass landlord exodus. Reapit’s analysis suggests that the loss of 17% of rental stock could result in a reduction of over £229 million in fully managed and let-only fees annually. This financial hit could be particularly severe for agencies that rely heavily on income from property management services.

For agencies, the challenge will be twofold: not only will they need to adapt to a smaller rental market, but they will also need to find ways to support their existing landlord clients through the transition. This could involve providing advice on energy efficiency upgrades, helping landlords access government grants or loans, or exploring alternative financing options.

The Need for Government Support

Given the scale of the challenge, there is a growing consensus that more government support will be needed to help landlords meet the new EPC targets. While some support is already available in the form of interest-free loans and grants, Reapit argues that these measures should be expanded and improved. For instance, mortgage lenders could be incentivised to offer discounts for energy-efficient homes or adjust mortgage rates favourably for landlords taking equity out of a property to fund upgrades.

Without additional support, there is a risk that the costs of compliance will be passed on to tenants in the form of higher rents. Alternatively, landlords may choose to exit the market altogether, leading to a reduction in rental stock and further pressure on the housing market.

What Can Landlords Do?

For landlords, the prospect of meeting the new EPC targets may seem daunting, but there are steps they can take to prepare. The first step is to assess the current energy efficiency of their properties and identify any areas where improvements could be made. This might involve carrying out an energy audit or commissioning an EPC assessment to determine the property’s current rating.

Once the current rating is known, landlords can explore the various options available for improving energy efficiency. This could include simple measures like installing energy-efficient lighting or upgrading insulation, as well as more significant investments such as replacing an old boiler or installing solar panels. Landlords should also explore the various grants and financing options available, including those offered by the government and mortgage lenders.

How Symple Can Help

At Symple, we recognise the challenges that landlords and letting agencies are facing. That’s why we’ve designed our platform to make property compliance as seamless and stress-free as possible. Our platform manages all compliance needs, from gas safety checks to electrical inspections.

With Symple, you don’t have to worry about the logistics of arranging inspections or chasing certificates. Our platform connects you with a network of over 2,000 vetted service providers across the UK, ensuring that all jobs are completed by trusted professionals. We handle everything from start to finish, so you can focus on what matters most -managing your portfolio and growing your business.

Our fixed, transparent pricing means you’ll always know what to expect, and our guarantee ensures that if your certificates aren’t delivered on time, they’re free. Plus, with our easy-to-use dashboard, you can track the progress of all your compliance tasks in one place.

The new EPC targets represent a significant challenge for the UK’s private rental sector, with the potential to reshape the market in profound ways. For landlords, the key to navigating this transition will be to start planning early, explore all available options for improving energy efficiency, and seek out support where needed. Lettings agencies, too, will need to adapt, finding new ways to support their clients and maintain their revenue streams in a changing market.

As the deadline for compliance approaches, now is the time for landlords and agencies to take action. And with tools like Symple available to help manage the process, there’s no reason to wait. Sign up for Symple today and start taking control of your property compliance.