The proposed Energy Performance Certificate (EPC) changes are already starting to sway the buying preferences of landlords, according to research from Shawbrook.

A quarter (24%) of landlords say they are likely to avoid any property with a low EPC rating when looking to add to their portfolio.

The specialist lender said that government proposals to tighten energy efficiency rules for landlords are already having an impact on the buying choices of landlords. Under the proposals, landlords will not be able to let property with an Energy Performance Certificate rating below a C on new tenancies. From 2028 this could apply to all existing tenancies.

Of the 1,000 landlords surveyed by Shawbrook, nearly a third (30%) said they would buy a property that already has a C rating or above, and a further 24% said they were more likely to prioritise a property with the potential to reach C or above.

More surprisingly, 15% of landlords said they will only buy properties built in the last 20 years.

Impact of the changes

Landlord property choices are likely to evolve as a consequence of the upcoming changes, said Shawbrook, which in turn poses a potential issue for the UK’s housing market.

Demand for period properties could dwindle, leaving current owners at risk of being unable to sell without making improvements themselves.

On average, landlords estimate making the necessary improvements will cost them £5,900 on average.

Pressure is also on landlords from their tenants to consider energy efficiency. More than a quarter (28%) of landlords have already had tenants complain at least once about a property’s EPC rating, and 16% have received multiple complaints.

Landlords are, however, more likely to make changes to property if their tenants ask. Nearly two-thirds (61%) of landlords said they would be more likely to make updates to their property if tenants requested it.

Emma Cox, MD of real estate at Shawbrook, said: “It’s concerning to think that a significant proportion of properties within the private rental sector, could fall out of favour due to poor EPC ratings and significant improvements needing to be made in a short period of time. The market has a responsibility to offer landlords more guidance on what the proposed legislation will mean for them, where to start with improvements, and how to sustainably finance the works.

“Proactive landlords, already making changes ahead of the proposed deadline, will be in a strong position for the future, constantly one step ahead of the upcoming changes. While our research showing that most landlords are set to commence improvement works within the coming 14 months, making changes sooner rather than later will limit the risk of supply and labour shortages for landlords as we edge closer to the proposed 2025 deadline.”