2,946 Boston Landlords to be Hit by New Eco Rules
in 2030
The rental property
market is on the brink of a significant shift, one that will undoubtedly cause
concern among landlords across the UK. The new Labour government has made clear
its intention to raise the minimum energy performance standards for rental
properties, a move that could have far-reaching implications for both landlords
and tenants alike. The proposed change, which would see the minimum Energy
Performance Certificate (EPC) rating for rental properties increase from E to C
by 2030, has sparked a mix of anxiety and uncertainty within the property
sector.
The new
regulations are part of Labour’s broader commitment to combat climate change
and enhance energy efficiency across the nation’s housing stock. Yet this step
isn’t the first foray by a government into improving the energy efficiency of
the U.K.’s private rental homes.
The Tory government
first introduced EPC regulations for private rental properties in 2018 as part
of a broader effort to improve the energy efficiency of the UK's housing stock.
Under these regulations, landlords were required to ensure that their
properties met a minimum EPC rating of E before they could be legally rented
out. To support this, certain exemptions were allowed, and a cost cap was
introduced, limiting the amount landlords were required to spend on energy
efficiency improvements to £3,500 per property.
This cap was intended to
prevent undue financial strain on landlords, particularly those with older or
lower-value properties, while still encouraging necessary upgrades. The £3,500
cap covered a range of potential improvements, including insulation, heating
system upgrades, and draught-proofing, and was seen as a balanced approach that
allowed landlords to comply with the new standards without facing prohibitive
costs.
The Scale of the Challenge for Boston Landlords
While the
intentions of the Labour government are commendable, the practicalities for
landlords are anything but straightforward. Upgrading a property’s energy
efficiency from an E rating to a C rating is not merely a matter of a few minor
tweaks like it was from taking a property from a G to an E rating; it often
requires substantial investment. The reality of bringing a property up to a C
rating could be vastly more expensive, with some projections placing the cost as
high as £30,000 per property for older properties.
These figures are
not just arbitrary; they reflect the significant work required to meet the new
standards. From installing new insulation, upgrading heating systems, replacing
windows, to potentially more extensive renovations depending on the property’s
age and construction, the financial burden is considerable. For many Boston landlords,
particularly those with older properties or properties where the value of
rental homes are lower, the costs may seem prohibitive.
The Impact on the Boston Rental Market
The implications
of these changes are likely to be profound. Some Boston landlords may decide
that the cost of upgrading is simply too high and choose to sell their Boston properties
instead. This exodus from the rental market could exacerbate the current housing
shortage for tenants, driving up rents and making it even more difficult for those
tenants to find affordable rental homes (although paradoxically, making
buy-to-let more profitable for those that remain).
There is also the
risk that the increased financial burden on landlords will be passed onto
tenants in the form of higher rents. While the goal of improving energy
efficiency is to reduce overall living costs for tenants by lowering their
energy bills, this benefit could be offset if landlords raise rents to recoup
their investment. This could particularly impact properties where rental
incomes are lower, and the cost of upgrades represents a significant proportion
of the property’s value.
Does
Age, Tenure and Type of Home Make a Difference on the EPC Rating?
The EPC scores
associated with each energy efficiency band are:
·
Band A – 92 plus (most efficient)
·
Band B – 81 to 91
·
Band C – 69 to 80
·
Band D – 55 to 68
·
Band E – 39 to 54
·
Band F – 21 to 38
·
Band G – 1 to 20 (least efficient)
Looking at
only the property type, it certainly affects energy efficiency.
Overall,
“flats and maisonettes” are the most energy-efficient property type in the UK,
with a median energy efficiency score of 73, which is equivalent to band C. Detached
and terraced dwellings came in second at 66 while in last place was semi-detached
(65).
Detached
homes tend to be more modern, so should have a higher energy rating. There are three
external walls exposed in semi-detached houses, which would make you think it
would have better EPC ratings than a detached. However, the average age of UK
semi-detached homes is older than the average age of UK detached homes. Finally,
the terraced home normally only has two external walls, so should be better
than semis and detached homes. Yet, terraced homes have solid walls, which make
them perform not as well as cavity walls. Finally, flats and maisonettes, which
are more likely to be more modern and grouped in blocks, making them more
efficient.
Energy
Efficiency Across the Different Property Types and Their Tenure
Breaking
down each type into its three tenures of owner occupiers, private renting and
social renting…
Detached
properties exhibit relatively similar energy efficiency ratings across all
tenures, with owner-occupied homes scoring an average of 64, slightly higher
than the private rented sector at 62, with social rented properties at 66. This
suggests that while there is a marginal variation, social rented detached homes
tend to be more energy efficient on average.
Semi-detached
homes show uniformity in energy efficiency for owner-occupied and private
rented properties, both with an average rating of 63. Social rented
semi-detached homes, however, are somewhat more efficient, with an average
rating of 68. This may reflect better insulation or energy-saving measures in
the social housing sector.
Terraced
properties reveal a small increase in energy efficiency as we move from
owner-occupied (63) to private rented (64) and then to social rented (69). This
trend indicates that terraced homes in the social rented sector might benefit
from recent energy efficiency upgrades or more rigorous building standards.
Finally, flats
and maisonettes demonstrate the highest energy efficiency ratings across
all property types, with owner-occupied and social rented homes both scoring
72, and private rented properties closely following at 70. The higher ratings
in this category could be due to the structural benefits of multi-unit
buildings, such as shared walls that reduce heat loss.
In summary,
while there are differences in energy efficiency across different property
types and tenures, social rented properties generally exhibit higher energy
efficiency ratings, particularly in the semi-detached and terraced categories.
This may reflect concerted efforts within the social housing sector to improve
energy efficiency, possibly driven by policy initiatives and funding targeted
at reducing fuel poverty.
Energy Efficiency by Property Age
Finally, I just
wanted to look at the age of the property and see if there is any difference.
The age of a
home is also a key determinant of its energy efficiency, largely due to
advancements in construction techniques and regulations over time. Properties
built from 2012 onwards tend to have the highest energy efficiency, with a
median score of 84, aligning with EPC band B. Homes constructed between 1983
and 2011 also perform relatively well, with a median score of 72.
Older
properties, particularly those built between 1930 and 1982, have a lower median
energy efficiency score of 65. The least energy-efficient homes are those built
before 1930, which have a median score of 59, placing them in band E.
The
concentration of older properties in an area can significantly impact its
overall energy efficiency ratings, with areas of Boston containing a higher
proportion of pre-1930 homes typically showing lower median scores.
The
Regional and Local Boston Picture
38.36%
of UK private rented homes are in the proposed minimum EPC standards of A to C
(compared to 36.28% in the East Midlands).
Nationally,
59.46% of private rented homes are in the D & E EPC ratings at the moment, (compared
to 61.85% in the East Midlands).
There are 4,763
private rented properties in Boston, of which 2,946 are in EPC Bands D and E.
To visualise that
better, I have created this heat map to show the extent of the issue for Boston
landlords.
Boston Landlords Navigating the Uncertainty
In the face of
these challenges, it is crucial for Boston landlords to adopt a pragmatic
approach. While the initial reaction may be one of concern, it is important to
consider the long-term benefits of making these energy efficiency improvements.
Properties with higher EPC ratings are not only more attractive to tenants, who
are increasingly looking for homes with lower running costs, but they also tend
to have higher market values. By investing in upgrades now, landlords can not
only comply with future regulations but also enhance the value of their
investments.
Moreover, there
may be opportunities to mitigate the costs. The government has yet to finalise
the details of the new regulations, and there is hope that they will introduce
measures to support landlords through this transition. For example, there has
been discussion around increasing the cap on allowable expenditure for energy
efficiency improvements, potentially up to £10,000. Additionally, there may be
grants, loans, or tax incentives available to help offset some of the costs.
Boston landlords
should also consider the timing of their investments. While the 2030 deadline may
seem distant, the scale of the work required means that starting early could be
beneficial. Properties that are upgraded sooner rather than later will be in a
better position to attract and retain tenants, particularly as energy
efficiency becomes an increasingly important consideration for renters.
Furthermore, by acting now, landlords can avoid the rush and potential price
increases that are likely to occur as the deadline approaches.
It is also worth
considering the broader societal benefits of these changes. Improving the
energy efficiency of rental properties is not just about meeting government
regulations; it is about contributing to the fight against climate change and
helping to reduce the country’s overall carbon footprint. This is something
that both Boston landlords and tenants can take pride in, and it aligns with
the growing demand for more sustainable living options.
Moreover, the
improvements made to properties will not only benefit current Boston tenants
but also increase the long-term viability of the rental market. As properties
become more energy-efficient, they will be better equipped to withstand future
changes in energy prices and regulations. This future-proofs investments and
ensures that landlords can continue to offer quality housing in a competitive
market.
Final Thoughts: A Strategic Approach for Boston
Landlords
In conclusion,
while the proposed changes to EPC requirements may initially seem daunting,
they should be viewed as an opportunity rather than a threat. By taking a
proactive and strategic approach, Boston landlords can not only meet the new
standards but also enhance the value and appeal of their properties. This will
not only benefit their own portfolios but also contribute to a more sustainable
and resilient local rental market.
The key is to
start planning now, seek out advice from agents like ourselves or many of the
other agents in Boston, and consider the long-term benefits of these changes.
The road ahead may be challenging, but with careful planning and a commitment
to improving the quality of rental housing, Boston landlords can navigate this
transition successfully.
As leaders in the
property market, feel free to contact us to discuss what has been said in the
article as it is everyone’s responsibility to not only meet these new standards
but to embrace the positive changes they bring.
