Michael Davey, Group Head of Sustainability, OSB Group
Recent headlines suggesting landlords could face bills of tens of thousands of pounds to bring rental properties up to EPC C have put the potential cost of future energy efficiency requirements firmly back on the agenda.
For brokers, these headlines are likely to prompt questions from landlord clients about what future EPC requirements could mean for their portfolios and whether they need to build additional energy efficiency improvements into their maintenance budgets.
With the government intending to require privately rented homes in England and Wales to meet EPC C by October 2030, understanding the likely cost of compliance is becoming an increasingly important consideration for landlords.
A single figure cannot reflect the reality across a diverse rental market. The cost of improving a property’s EPC rating depends on a range of factors, including its age, condition, construction type and any energy efficiency upgrades that have already been completed.
In-house research conducted by Rely’s parent company, OSB Group, into around 10,000 properties found that nearly half could be improved to EPC C for £3,500 or less, with 17% requiring less than £750 of work. Less than one in four fell into the highest-cost category, where costs exceeded £10,000.
Some properties will require investment at that level, particularly those that are older and less energy efficient. However, the findings suggest these are the exception rather than the rule. Proposed EPC requirements also include a £10,000 cost cap before exemptions may apply, meaning the cost of works is only one part of the conversation brokers may need to have with landlord clients. Understanding what exemptions are available and how they may apply could help brokers provide more informed guidance to landlord clients.
The challenge with relying on averages is that they can conceal wide variations between properties. The median cost identified in the OSB Group research was £3,500, considerably lower than the average cost, highlighting the extent to which upgrade costs can vary significantly between properties.
A modern flat that already benefits from double glazing, insulation and an efficient heating system will have very different requirements to an older property that has seen little investment in energy efficiency. Some landlords may need only modest improvements to reach EPC C, while others could face much larger bills.
Average figures can therefore become misleading, as a relatively small number of expensive retrofit projects can skew the overall picture and create the impression that all properties require significant investment when that is not the case. In many cases, the route to a higher EPC rating does not require major refurbishment. Measures such as loft insulation, upgraded windows, draught-proofing, energy-efficient lighting, and heating controls can make a difference to EPC performance while also helping tenants reduce their energy bills.
Many properties are already relatively close to EPC C and can reach the required standard through targeted improvements rather than major retrofit projects. For brokers, that creates an opportunity to move the conversation away from headline costs and towards the specific requirements of individual properties.
Not every property falls into that category – older housing stock often presents a greater challenge. Properties built before modern energy efficiency standards were introduced are more likely to have poor insulation, less efficient heating systems and other features that make improvements more complex and expensive.
Higher upgrade costs are typically associated with properties in this category. Landlords with these properties may need a longer-term plan for improvements, while those with newer or partially upgraded properties could find the route to EPC C much more straightforward.
For landlords facing relatively modest upgrade costs, the priority may simply be understanding what work is needed and when it makes sense to complete it. Where more extensive improvements are required, brokers can help clients explore funding options and consider how EPC upgrades fit into wider portfolio plans and long-term investment objectives.
With energy performance likely to remain an important consideration across the buy to let market, understanding likely upgrade requirements is becoming an increasingly valuable part of brokers’ conversations with clients.
The key message is that EPC costs are not one-size-fits-all. While some properties will require significant investment, many can reach EPC C for far less than recent reports might suggest.
For brokers, the role is not to focus on a single cost estimate, but to help landlords assess the requirements of their individual properties. Understanding the likely scope of works, the cost involved and the available funding options will help landlords make informed decisions long before any future EPC requirements come into force.