London investors worst hit by government’s EPC laws

London landlords are most likely to find thier homes are unlettable, meaning tenants are at risk of having a shortage of stock in the capital, analysis by data science firm Outra has revealed.

This is due to proposed government EPC regulations to ensure all rental homes have an EPC rating of C by 2028.

Some 4.5 million rental properties across the UK currently have an EPC rating of D or below.

There are 841,000 of those in London, accounting for 1.9 million rooms. In total, there are 4.7 million rooms across the UK in rental properties EPC D or below.

Phil Tennant, chief operating officer 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.”

The government will reportedly cap the maximum spend per property at £10,000 – regardless of whether or not the C rating is achieved, meaning landlords face a cumulative bill of £45 billion just to upgrade their properties to the bare minimum.

Currently, all privately rented homes in England and Wales need to meet a minimum energy performance of band E before they can be let.

Ministers had previously proposed a deadline of 2025 for newly let rentals to achieve an energy performance rating of at least a C, and a deadline of 2028 for all other rented properties.

Reportedly this deadline will be set at least three years later in 2028 and apply to all rental properties.

The UK has the oldest housing stock in Europe, with almost 38% of homes being built prior to 1946.

This means that many homes have lower EPC ratings and will need upgrading to meet anticipated future regulatory changes.

A home with a higher EPC rating is likely to be more insulated and efficient which will reduce energy usage and keep bills down.