Over half of landlords said they will pass some of the costs of improving their properties’ energy efficiency rating onto their tenants, according to Shawbrook Bank.

Landlords could soon have to make improvements to their properties ahead of a proposed 2025 deadline to get their EPC rating to a C level.

When asked how much they believe they would need to spend on making the necessary improvements, landlords estimated that it would cost £5,900 on average to improve their properties.

This figure, however, could be significantly underestimated. Landlords who have already made improvements to their properties have spent £8,900 on average to date. Wider market issues such as labour and material shortages could also cause landlords’ final bills to rise.

Shifting the cost

Tenants in London are most likely to see these costs passed onto them, with 68% of landlords in London saying they’d pass at least some of the costs on to their tenants in a bid to recoup the cost of carrying out the improvement works.

Whether landlords put up rents initially or not, many expect them to rise as a natural consequence of the new regulations with nearly a fifth (18%) of landlords expecting this.

However, tenants living in energy efficient properties can expect lower energy bills as a result of more energy efficient features, such as better insulation, energy-saving appliances, heating controls and energy-efficient windows.

Emma Cox, MD of Real Estate at Shawbrook Bank, said: “Landlords may be underestimating the costs involved, leaving them open to unexpected bills.

“As a result, tenants could be caught in the crossfire as landlords seek to recoup some of the costs. While tenants can expect to benefit from cheaper energy bills as a result of greater energy efficiency, any savings on bills could be outweighed by a market wide rent rise in 2025.

“Landlords have a key part to play in the drive towards a greener future for the UK. While challenges and questions still remain, bringing the wider market together to educate landlords and support tenants during the process will help to mitigate some of the upcoming challenges.”