New research indicates that landlords in the UK are bracing for an average expenditure of £11,713 per property to bring them up to an Energy Performance Certificate (EPC) C rating. This substantial sum is viewed as financially unviable by many property owners, highlighting a significant challenge within the private rented sector.
A study by Pegasus Insight revealed that a significant proportion of landlords, 60%, currently own at least one property with an EPC rating below C. This suggests a considerable demand for retrofitting and energy efficiency improvements across the country. Despite the financial burden, the research also found a growing commitment among landlords, with 62% of those affected intending to undertake the necessary upgrades. This figure marks a 13% increase compared to the previous quarter, indicating a rising awareness and perhaps a sense of inevitability regarding these improvements.
Mark Long, founder and managing director of Pegasus Insight, commented on the findings, stating that the primary concern for many landlords has shifted from whether to improve energy efficiency to how these improvements will be financed. He noted that while most landlords are willing to invest, the costs are considerable. Long also highlighted a growing opportunity for lenders to provide financial support, suggesting that successful solutions will be those that make retrofit funding straightforward, accessible, and commercially viable for landlords.
The research also delved into how landlords plan to fund these upgrades. More than two-thirds expect to use their personal savings to cover at least part of the cost. Almost a quarter are hoping to secure government grants or other forms of support, while others are exploring options such as borrowing or releasing equity from their properties. Landlords also expressed a desire for dedicated green finance products, preferential mortgage rates for energy-efficient homes, and simpler access to retrofit funding mechanisms.
Crucially, landlords identified an EPC cost threshold of approximately £9,000 per property as affordable. This leaves an average gap of over £2,700 between what they expect to spend and what they consider manageable, underscoring the financial strain these regulations could impose. Separate research by Pegasus Insight also indicated that tenants are increasingly valuing energy efficiency, with 44% considering a property's EPC rating important when choosing a home, suggesting a market incentive for landlords to invest.