EPC upgrades can also help owners save money. Mr Anson-Hart and Mr Baker have just completed the development of a Grade II listed office building in Truro, which they have converted into two apartments, raising the EPC ratings from E to C and B. The properties will be rented on a room-per room, charges included. “EPC ratings are extremely valuable to us as we pay the bills. The upgrades will likely cut our bills by a quarter,” Mr Anson-Hart said.
For non-flatshares, EPC ratings translate to higher rents. Landlords can charge more for energy-efficient properties because they are cheaper for tenants to operate, Mr Anson-Hart said. “EPCs are so important to affordability, especially at the crazy rate at which bills are rising. If I had two identical properties, but one was an E and the other was a C, I could charge 700 £ per month for the E and £750 for the C.”
Mr. Anson-Hart’s upgrades to boost EPC ratings included the installation of quantum storage heaters and thermal upgrades to exterior walls. The Truro listed property had wooden sash windows, which were a major source of heat loss, but were difficult to retrofit to comply with listed building regulations. To circumvent this problem, the pair installed shutters above the windows. Investors need liquidity to be able to make money from EPC upgrades. On average, a homeowner would need to spend £6,472 to upgrade a property from D to C, and £13,285 to upgrade from E to C.
There are 1.9 million E-rated rental units, which landlords will struggle to upgrade. Ms Rosser said: “Nearly two million rental units are at risk of becoming obsolete. But rental demand is so high that the market cannot afford to lose them.
“These draconian regulations can be an opportunity”
Overhead costs are pushing many owners to sell before the rules change. The government has proposed a deadline of 2025 for all newly let properties and 2028 for all existing properties. Landlords who fail to comply will face a £30,000 fine and their properties could become unleasable.
Sophie Lang, of Lewis Haughton Wills estate agents in Cornwall, said: “Older owners are selling properties and moving out as prices are high due to EPC requirements.
They are replaced by a new type of rental investor: they are young people, in their thirties, often two friends who have joined forces, who are looking for properties to develop. They aim for the easy EPC gains.
Adam Kingswood, of Kingswood Residential Investment Management, a buy-to-let specialist in Nottingham, said: ‘We have clients who see regulation as an opportunity rather than a barrier and have built a strategy around that. They take advantage of motivated suppliers who are afraid of the coming legislation. »
Landlords looking to offload rental properties with poor EPC ratings can still get a high price because supply is so low, but soon those properties could be reduced, Mr Kingswood said. “Perhaps at the end of this year, when the market slows down and the response to the consultation has been announced, it will be much more difficult to sell properties with poor EPC ratings.
The total value of private rental sector properties that are currently classified as E-band is £500bn, according to JLL. If the value of all these properties increased by 8%, the value of the total portfolio would increase by £40 billion.