Landlords face a huge gap in the amount they are willing to pay to make their property more energy efficicent and the estimated costs of hitting proposed new Energy Performance Certidicate targets, said Paragon.

The buy-to-let specialist found that just over three-quarters of landlords (77%) are willing to spend up to £3,000 to upgrade each property they own to EPC C in order to meet regulations proposed by the Government.

However, analysis by the mortgage lender reveals that 78% of landlords would need to spend over this amount.

In fact, taking into account the Government’s proposed cap of £10,000 per property, the average cost to upgrade each property to EPC C is £10,560, according to Paragon.

How to pay for it?

Six in 10 landlords said that they would use savings to pay for upgrades, making it the most popular source of potential finance, followed by 27% who said that they would increase rent.

Almost one in five (19%) would rely on Government funding, just under one in 10 (8%) would utilise a further advance from a mortgage lender or take out a loan, and a similar proportion (7%) would release equity from their portfolio.

Richard Rowntree, mortgages managing director for Paragon Bank, said: “The apparent disparity in what it is likely to cost to meet these standards and what landlords are willing to spend helps to illustrate the financial challenge the new regulations would pose to buy-to-let investors.

“There remains a lot of uncertainty around the proposals, so the sector needs some clear guidance from the Government. With this, my hope is that landlords will have a better understanding of how the new regulations would impact them and the resulting financial support they would require.”