Research suggests widespread ignorance of new UK energy ratings for lettings industry
here is widespread ignorance in the UK about what a property’s energy efficiency rating should be with tenants in the private rented sector unaware that landlords are now required to provide a minimum level.
Only 4% of those surveyed are even aware of the new legislation, less than three in 10 know their property’s energy efficiency rating and only 5% have taken any steps to measure their energy efficiency.
The survey from landlord insurance specialists Just Landlords comes as a new law effective from the 01 April requires all new lets and relets to have a minimum Energy Performance Certificate (EPC) of at least E. Similar rules will be introduced for all existing tenancies on 01 April 2020.
The survey highlighted some potentially costly news for those involved in the private rental market. Of those surveyed, only 24% were able to identify the correct fine of up to £4,000 that could be administered if a property is found to have an EPC rating below E.
Some 78% of those asked said they would not like the property they own or rent to have its EPC rating improved and 80% did not know that an EPC could be a clear indication of the environmental impact a property is having.
When asked what changes they could make to ensure their property improved its EPC, just over half, 52%, knew that improving the insulation of the home could have a large impact.
‘The lack of awareness around this key legislation is astounding. Landlords and tenants need to know what their EPC rating is, as it could not only help them avoid a fine, but also could save them large sums of money,’ said Rose Jinks of Just Landlords.
‘The fact that our survey found that less than four in 10 people in the market are even aware of how improving your EPC could save them money is shocking,’ she added.
Separate research from the UK Green Building Council suggests that landlords face a collective bill of £420 million to meet the new energy standards to comply with the updated regulations.
The latest industry data estimates that around 300,000 rental properties currently fall below the new minimum energy standards. The council has calculated that the average cost of raising an F or G energy rated property to the required minimum E standard is £1,400.
However, experts warn that portfolio landlords with multiple properties and limited liquidity must act quickly to secure the necessary finance to make these energy improvements and avoid the potentially significant fines that could cripple their business interests.
‘At a time when their profits are being seriously squeezed following a swathe of new tax and regulatory changes impacting the buy to let sector, landlords are feeling increasing pressure on their cashflow this year and can ill afford the potentially huge fines,’ said Marc Goldberg, commercial chief executive officer at specialist lender Together.
‘While the vast majority of landlords understand that enhancing the energy efficiency of their properties will boost rental yields over the long term, unfortunately many don’t have the available cash to hand to fund the urgent home improvements that are needed. Although the estimated cost of updating a single rental property isn’t too much of a stretch, the average UK landlord has around eight properties in their portfolio, a scale at which costs can very quickly spiral out of control,’ he pointed out.