Everyone should be doing their bit to help reduce the
UK’s carbon footprint on the globe – yet the question is, is that burden being put
too much on the shoulders of Neath landlords with potential bills of £7,600+ in the next four years?
The background
– the UK has obligated itself to a legally binding target to be carbon neutral
by 2050. One of the biggest producers of greenhouse gasses is residential
homes.
To hit that
carbon-neutral target (as one-fifth of the UK’s carbon output comes from
residential property), every UK home will need to achieve a minimum grade of ‘C’
on their Energy Performance
Certificate (EPC) by 2035. Each
EPC has a rating between ‘A’ and ‘G’ – ‘A’ being the best energy rating and ‘G’
the worst – like an energy rating on a fridge or washing machine.
All UK rental properties have required an EPC.
Yet, from April 2020, the Minimum Energy Efficiency Standards (MEES)
regulations have required all private rental properties (including rental
renewals) to have a minimum EPC rating of ‘E’ or above.
Yet new legislation being discussed by the
Government’s Climate Change Committee has suggested that landlords should
play their part and increase the energy efficiency of their private rented
homes. Sounds fair until you dive into the details.
The Government
is muting the idea that all new tenancies (i.e. when a new tenant moves in)
in private rented properties should be at an EPC rating of ‘C’ or above by 2025
(and all existing tenancies by 2028). The issue is …
73.04% of all private rented properties in Neath and Port Talbot have an EPC rating of ‘D’ or below.
The
problem is some Neath landlords will find it very expensive, neigh impossible,
to improve the energy efficiency of their Neath rented properties, especially
those Neath landlords who hold older housing stock
such as terraced properties built in the 1800s. These Victorian terraced houses
never perform well on EPC ratings as they have solid walls.
Now, of course,
you can improve the EPC rating of a terraced house by improving roof
insulation, boiler replacement, solar heating, and high-grade uPVC windows. Yet, with some terraced houses, there will
come the point where you will be unable to get to the haloed ‘C’ rating without
installing external or internal wall insulation, sometimes even floor
insulation.
With
wall insulation costing between £5k and £15k and floor insulation around £5k …
the bill to improve all Neath and Port Talbot’s private rented properties will be a minimum of £24,218,800.
But
before I talk about what the options are for Neath landlords, here’s the weird
part of EPC’s. An EPC rating is calculated on the cost of running a property
and not the carbon output or energy efficiency, despite its name.
My
advice to Neath landlords – although it’s correct to create a future strategy,
all I can say at this point is ‘more haste less speed’. These rule changes are
only a discussion paper, and it remains
open for consultation by any member of the British public until 30th December
2021. That means the Government’s strategies and
tactics may change.
Given that 57% of private rented
properties are below a ‘C’ EPC grade, it is hard to believe the Government
could achieve this without making big cash grants available.
For
example, there is presently a cap of £3,500 for energy improvements that Neath
landlords have to spend to get it to the existing EPC ‘E’ target grade on
private rented homes (i.e. if you have a privately rented home at an ‘F’ or
‘G’ EPC rating, you only need to spend a maximum of £3,500 as a landlord on
improving your EPC rating and still being legal even if those £3,500 don’t get
you to the current ‘E’ rating minimum). So, if the current rules allow an
exemption to the EPC renting rules, if a Neath landlord can’t improve their Neath
property enough, conceivably, could this be extended?
So,
what are Neath landlord’s options?
One
thing you could do is put your head in the sand and hope it all goes away!
Another
thing some savvy Neath landlords do (be they my client, clients of other
letting agents in Neath or even self-managing landlords) is to sit down and
plan a strategy for their Neath rental portfolio. I print off all the EPC’s of
their rental portfolio, look at the recommendations, then discuss a plan to
ensure they are covered whatever the Government decides to make the new EPC
rules. Like all things in life, plan for the worse and hope for the best.
If your agent isn’t offering that service, please drop me a line because I would hate for you to miss out on the advice and opinion that so many Neath landlords have already had from me. The choice is yours.
