The buy to let sector still requires £400m spending on improving the energy efficiency of its stock in order to conform with new MEES regulations which came into effect on Sunday.
From April 1 landlords’ properties have had to have a minimum Energy Performance Certificate rating of E. While this will initially apply only to new tenancies and renewals before being extended to all existing tenancies by 2020, the latest industry data estimates that around 300,000 rental properties currently fall below the new minimum energy standards.
Specialist mortgage lender Together says a recent report shows that sub-standard properties require a typical spend of £1,400 to move from an F or G rating to an E or better, typically through the installation of new loft and cavity wall insulation, a modern boiler or double-glazed windows.
“At a time when their profits are being seriously squeezed following a swathe of new tax and regulatory changes impacting the buy to let sector, landlords are feeling increasing pressure on their cashflow this year and can ill afford the potentially huge fines that could come their way if they miss the upcoming EPC improvements deadline” explains Marc Goldberg, commercial chief executive at Together.
“While the vast majority of landlords understand that enhancing the energy efficiency of their properties will boost rental yields over the long term, unfortunately many don’t have the available cash to hand to fund the urgent home improvements that are needed” he adds.
“Although the estimated cost of updating a single rental property isn’t too much of a stretch, the average UK landlord has around eight properties in their portfolio; a scale at which costs can very quickly spiral out of control.”