Labour’s EPC targets will drive housing market into a ‘frenzy’ (Wednesday 15th January 2025)
Ed Miliband’s green targets for landlords will drive Britain’s property market into a “frenzy” and worsen the housing shortage, experts have warned.
The Government has launched a consultation to overhaul controversial energy performance certificates (EPCs), while the energy secretary wants all rental properties to achieve a minimum standard of energy efficiency by the end of the decade.
But proposals to favour homes with the “capacity to integrate with smart technology”, or green heating systems such as heat pumps, will leave landlords scrambling to renovate properties or sell up.
Mr Miliband said it was a “Tory scandal” that tenants were still “shivering in cold draughty homes”. By 2030, he added, landlords must ensure their properties have achieved an energy efficiency score, or be banned from letting to tenants at all.
Currently, the “minimum energy efficiency standard” requires an E-rated EPC, however, new metrics may mean an entirely new standard, which “isn’t considered in much detail within the consultation”, said Amy Cushing, of law firm Moore Barlow.
Ms Cushing added: “As it stands, the consultation does not go into detail as to what the thresholds would be for each metric, so landlords do not know what standards their properties will need to meet.” Some landlords have threatened to sell up in the face of the high cost of meeting these targets.
Ryan Etchells, of property lender Together, warned that the previous government’s war on landlords had already driven many investors out of the market. He added that the UK has a severe shortage of tradespeople – a crisis the Government has failed to address in its reforms.
Mr Etchells said: “It’s been like the hokey cokey over the last few years for landlords. But if we’re not careful it could become a frenzy. There simply won’t be enough tradespeople to make improvements.
“With this ticking EPC clock in the background, we’ve found a lot of landlords who were five years away from divesting their portfolios are bringing it forward. We could see an oversupply of ex-rentals on the market, which is the last thing anyone needs.”
It has been often pointed out that EPCs in their current form are often unreliable, and that assessors are inconsistent. Tom Garrigan, of the Building Services Research and Information Association, said: “If you were to get several EPC assessors to do an assessment of the same property, you would probably get a different result for each one.”
The Government is now seeking views to “manage the quality of EPCs to increase trustworthiness, reliability and accuracy”.
But Mr Garrigan said that so long as EPC assessors cannot check inside walls to determine the quality of insulation, gradings will be based on “assumptions based on a set of assumptions”.
He added: “The heavy lifting is seen as being done by heat pumps, but your heat pump isn’t going to be running as well as you think it is if your house leaks like a sieve.”
Doubts remain that the private rental sector can meet Mr Miliband’s lofty targets in time.
David Fell, of Hamptons estate agency, said: “Even if EPCs weren’t under review I would say 2030 was already quite an ambitious deadline for landlords to make changes. The majority of properties still don’t even meet the C-grade.”
An EPC assessment costs between £40 and £120, and a certificate lasts for 10 years. But Mr Fell said that efforts to improve the quality of assessments, and proposals to reduce the validity period to five or even two years to “allow building upgrades to be captured more frequently”, may drive up costs for landlords.
He said: “If you compare it to the Electrical Installation Condition Report, which costs around £300, that work is more intrusive and EPCs look like they are heading that way.
“Interestingly, if you’re an owner-occupier, you don’t need half of these certificates. It feels like a lot of the costs of net zero are being pushed towards landlords.”
Jonathan Wright, of law firm Knights, said that banks were “becoming increasingly alive to EPC requirements and often insist that property owners upgrade their portfolios to higher ratings”.
Indeed, large lenders including Nationwide Building Society and NatWest ignored Rishi Sunak’s U-turn in 2023, and have stood by pledges to make 50pc of their mortgage customers’ homes energy-efficient by 2030.
Those buying energy-inefficient homes may find themselves turned down for mortgages, or face higher monthly payments than those with better EPC scores.
For landlords who poured money into achieving a C-rated certificate under current guidelines, a sudden shift in metrics “could render some properties unlettable and put a greater strain on a market where there is already housing shortages”, said Scott Battram, of legal firm Hunters Law.
Mr Battram added: “The shifting EPC criteria to prioritise greener technologies, such as solar panels and air-source heat pumps, pose a risk to landlords who have invested heavily under current standards.
“Older properties, like 1930s builds or mews houses, may struggle to adopt these changes due to structural limits or planning restrictions, potentially resulting in downgraded EPC ratings.”
A government spokesman said: “Everyone should live in a warm, safe home.
“Our plans for private and social rented homes to achieve energy performance certificate C or equivalent by 2030 will help deliver cheaper-to-heat homes while lifting up to one million households out of fuel poverty through the biggest potential boost to home energy standards in history. We will consult on these plans in due course.”