Nearly two-fifths, or 39%, of commercial landlords are unaware of new standards on energy performance certificates that come into force next April, according to Handelsbanken, which it says “underlines the confusion in the market and need for longer-term planning”.
Currently, just 9% of commercial landlords have an EPC rating of E or above across all of their properties, according to a poll of portfolio buy-to-let owners by the Swedish lender.
Under the next stage of the government’s Minimum Energy Efficiency Standards from April 2023, all private rented properties in England and Wales will need an EPC rating of at least E in order to continue being let.
The move is part of the government’s ongoing plan to upgrade private rented homes to contribute to its net zero target by 2050.
An EPC rating of C is generally rated as adequate by most housing and green bodies.
The lender says 16% of commercial landlords report they are planning to sell their properties as they find the new EPC requirements “too daunting, primarily as they cannot afford to make the requisite changes”.
It adds that 42% of respondents planning to upgrade their properties by installing insulation, 36% will invest in an energy-efficient boiler and 35% say they will buy newer buildings instead of older, less energy-efficient homes. Also, 30% say they will fit double glazing.
Professional landlords plan to invest £95,400 on average to improve their portfolios over the coming months, or around 3% of their portfolio’s total value.
The main reasons cited by landlords who have not made plans to improve their properties, were that current regulations make it too difficult to do so, at 42%, a lack of knowledge about what changes to make, at 38%, and not believing that they can access the appropriate finance, at 14%.
Handelsbanken UK head of sustainability Richard Winder says: “It is worrying that so many landlords declared themselves unaware of the April 2023 deadline, though there are signs many are taking action, for example by investing in double glazing and extra insulation.
“Although money is getting tighter right now, the rise in fuel costs and further planned hikes in energy efficiency standards make carbon-reducing measures a smart investment for landlords and tenants alike.
“Landlords will want to start by consulting their existing Energy Performance Certificates, to find the most cost-effective route to a higher energy-efficiency rating.”
Handelsbanken’s poll was conducted by data firm PureProfile in June among 120 professional landlords with a minimum of four properties in their portfolio. On average respondents owned 7.5 properties with an estimated total market value of £2.76m. All the landlords questioned have exposure to residential property and 58% have exposure to commercial property.