The private rental sector is already attempting to improve its EPC results according to research from Shawbrook Bank.
From 2025 new rules mean rental properties with an EPC rating of D, or below, will not be able to take on new tenants.
The bank’s study found that 17 per cent of landlords had made efforts to improve the energy efficiency of their property, rising to 22 per cent of portfolio landlords with four or more buy to let units.
For example, of all the landlords that had undertaken a refurbishment, 22 per cent had replaced the boiler and heating system in their property, a further 23 per cent had replaced the windows, and 18 per cent had installed new white goods.
Making properties more energy efficient can boost demand from tenants too.
Indeed, one in 10 private renters contacted as part of the study said that they would stay in their current property longer if their landlord made changes to the property which benefit the environment.
Tenants were also happy to pay more in rent should landlords make certain changes to their property.
Some 18 per cent of tenants said they’d pay more if windows were replaced, 15 per cent would pay more for a new boiler and heating system, and 10 per cent suggested that installing solar panels would justify paying more rent.
However, for those investors who own older properties - which are typically less energy efficient - it can be harder to improve the rating. This could mean that by 2025 some properties could be ‘unrentable’ and ‘unsellable’ warns the bank.
According to data from the Ministry of Levelling Up, Housing and Communities there are close to 13m homes in England and Wales currently with an EPC rating of D or below.
John Eastgate, property finance managing director at Shawbrook Bank, comments: “For many property owners in the UK, getting their property to a C rating is going to take a lot more than simply installing a new boiler. The reality is that for older properties - some of which may be listed- it will be an expensive exercise to make the necessary changes.
“It’s welcome news that landlords are already acting ahead of the rule change in 2025 and it’s completely right that we should all be considering how to make our properties more energy efficient and environmentally friendly. Some owners, however, will need support from both lenders, and the government, to make these changes financially possible.
“Without this, we risk a substantial part of the private rental sector becoming unrentable and therefore unmortgageable and unsellable in 2025. With home ownership still out of reach for many this could leave us with a shortage of quality homes to rent.”