EPC upgrades scrapped in latest government U-turn: Industry reacts

Has the government really got the best interests of landlords and tenants at heart by rowing back on key green pledges including EPC upgrades - or is it simply electioneering?

Related topics:  Landlords,  EPC,  Government,  Energy Efficiency,  Politics
Property | Reporter
21st September 2023
Rishi Sunak 824
"The Government's wavering stance has ultimately betrayed landlords and tenants, while negatively impacting businesses who rely on a stable and thriving rental market"
- Jonathan Daines - lettingaproperty.com

Yesterday evening, Rishi Sunak confirmed growing rumours that the government was to 'soften' several key green policies, including minimum EPC standards for rental properties, that were to cost landlords thousands.

In his speech, he stated that the costs of upgrading homes were huge and likely to be passed on as higher rents to tenants.

Instead, the Government will offer money as an incentive to landlords and homeowners to upgrade their properties, with EPC changes that were due to go live for existing tenancies in 2028 now scrapped.

A new survey by boiler repair firm Fair Fix revealed that just one in five property owners supported the planned ban on gas boilers, with 94% saying that they should choose what type of energy powers their home.

However, with many landlords already committing thousands of pounds to the proposed changes and some even walking away from the sector as they could not afford the upgrades, the news would have felt like a further betrayal from a government that has long been perceived to be anti-landlord.

Those in the industry were quick to react to the latest government U-turn. Here's what they said:

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “The NRLA wants to see all properties as energy efficient as possible. However, the uncertainty surrounding energy efficiency policy has been hugely damaging to the supply of rented properties.

"Landlords are struggling to make investment decisions without a clear idea of the Government's direction of travel.

“It is welcome that landlords will not be required to invest substantial sums of money during a cost-of-living crisis when many are themselves struggling financially. However, ministers need to use the space they are creating to develop a full plan that supports the rental market to make the energy efficiency improvements we all want to see.

"This must include appropriate financial support and reform of the tax system which currently fails to support investment in energy efficiency measures.”

Jonathan Daines, Founder and CEO, lettingaproperty.com said: “While welcome news for some, the Government’s U-turn on introducing new energy efficiency regulations on homes is frustrating for our landlord clients, many of whom have already taken steps to ‘do the right thing’ in preparation for change.

"With the planned EPC changes looming, many landlords in our community proactively improved the energy efficiency of their properties. They incurred significant costs and practical hassles, to make energy efficiency upgrades in line with proposed EPC minimums.

"Some of our landlords even took the drastic step of selling their property because it was financially or practically impossible to make necessary improvements.

"These landlords have walked away from the Private Rented Sector and a ripple effect has been felt, with tenants competing within a shrinking pool of homes to rent. Those lucky enough to secure a rental are typically paying more for the privilege, thanks to reduced stock levels – an unwelcome burden on top of rising living costs.

"Letting agents too have felt the pain of Government indecision. With many landlords choosing to exit the market, potential customer numbers have decreased, leading to increased competition combined with rising acquisition and retention costs.

"Amid the chaos, we mustn’t lose sight of the positive purpose behind making energy efficiency improvements and creating greener homes to support the wider commitment to ‘net zero’. It is imperative however that policymakers provide clarity and consistency in their approach to rental property regulations.

"The Government's wavering stance has ultimately betrayed landlords and tenants, while negatively impacting businesses who rely on a stable and thriving rental market.”

Nathen Emerson, Propertymark CEO comments: “Propertymark believe in robust forward provision to ensure the economics of any net zero targets are fully balanced and that investors, homeowners and landlords have support and motivation to initiate the required changes. All new targets must be fully backed by legislation that incentivises and encourages people rather than ever penalise them”.

"There needs to be crystal clear communication setting down a secure timeline of expectations, this must fully consider how new building developments will reach or exceed the proposed targets, but also how such requirements will be retrofitted to current buildings as well."

Paresh Raja, CEO of Market Financial Solutions, said: “The U-turn on green pledges feels significant for Sunak and his party. It’ll create a furore that will last for some time.

“Looking specifically to the scrapping of the impending EPC regulations, we have to acknowledge what a complex issue this is. Many landlords will breathe a sigh of relief that there is no hard deadline for them to upgrade D-or-below related properties.

"Tenants may also benefit - rental prices might have risen in order to cover the costs of landlords upgrading their properties.

“However, many landlords will have already improved the energy efficiency of their properties at great expense, so today’s announcement may trigger some frustration. Moreover, the next general election could result in the winning party reintroducing new EPC rules anyway, so the decision brings further uncertainty into a property market that would benefit from greater stability.

"Meanwhile, there are some renters who will worry about living in properties with poor energy efficiency - their bills this winter will reflect that.

“The shift towards a greener property market is to be welcomed and encouraged. Today’s announcement will offer some relief to landlords in the short-term, but the long-term goal - as in every industry - must be to work together towards a more sustainable future.

"Ultimately, greater clarity around long-term reforms is required within the property sector at this time.”

Emma Cox, Managing Director of Real Estate at Shawbrook Bank says: “Scrapping the impending EPC regulations might free up capital in the short term for landlords who haven’t yet invested in improving the energy rating of their properties. But while policies shift, climate change is going nowhere, and energy-efficient buildings will remain central to net zero plans.

"Rules might not be changing as soon as 2025, but professional landlords with modern, energy-efficient stock will be in the best position to attract tenants, as well as reduce potential voids, and importantly, be prepared for future legislative change.”

Ben Thompson, deputy CEO of Mortgage Advice Bureau, said: "The reality is that the UK will still need to upgrade its leaky housing stock. With energy bills in the spotlight, EPC ratings are climbing up prospective buyers’ wish lists, and if the housing market is to meet net zero targets, properties need to be retrofitted.

"The UK has some of the oldest and least efficient homes in Europe, and backtracking won't help solve the overall problem - it simply serves as kicking the can down the road."

Michael Cook, Group Managing Director of Leaders Romans Group, welcomed the changes: “Whilst we recognise all individuals and industries must think differently and act differently to reduce their carbon footprint and the impact of climate change, we welcome this u-turn by the government.

“Essentially, asking homeowners and landlords to dig deeper into their pockets at this difficult time is unwanted pressure.

“Landlords in particular have been continually hit with higher taxation and legislation, coupled with inflationary pressure and higher interest rates, leading many to conclude that it is time to sell.

“This supply restriction has seen rents go up at a greater rate than in living memory. Reducing capital outlay by reversing policies like this is in everyone’s interest in the short to medium term.

Simon McWhirter, UKGBC Deputy Chief Executive said: "The anger and frustration at this latest policy U-turn has reverberated across industry today. Delaying green policies just means they’ll have to be implemented much faster, later, pushing up the cost for everyone - householders and businesses alike.

"The Prime Minister’s change in approach will also have a chilling effect on investment and skills training across green industries as they’re faced with yet another pull on the policy handbrake, just as our members and wider business were scaling up their pro-green activities across the economy.

"To really tackle this problem, the best way to bring down costs for households is to insulate homes, but the Prime Minister pulled the plug on measures to ensure landlords upgrade the draughty homes of renters - the group most affected by fuel poverty.

"Apart from an increase in the heat pump grant, no other measures were announced to incentivise and help households to insulate and make the transition from fossil fuel heating. We’re awaiting the long-overdue national strategy to upgrade all of our homes and buildings. But all we’ve had today is a further erosion of commitment and clarity from government."

Gillian Charlesworth, CEO of the Building Research Establishment (BRE), commented: “BRE has long argued that we urgently require a clear, long-term plan to transition our homes and buildings away from fossil fuel boilers and onto clean heat, and today’s announcements by the Prime Minister could set us back substantially on this ambition.

“Nearly a quarter of the UK’s carbon emissions come from heating buildings – and tackling this will be crucial to achieving net zero by 2050. Heat pumps are likely to be the technology that will dominate the transition to net zero, but today’s delay to the phase-out of gas boilers will discourage the public and industry from supporting this drive over the long run.

“The Government’s U-turn on introducing tighter energy efficiency targets for landlords is similarly concerning. Our recent analysis shows that privately rented homes represent a quarter of all poor housing in England: excess cold caused by poor heating and low energy efficiency is the number one health and safety hazard in these properties. Failing to address this hazard head-on will have an immediate impact on the health of householders and pressure on our public services.

“We hope that the announcements are not a sign that the Government will water down the forthcoming Future Homes Standard as we need ambitious standards for new homes.”

More like this
Latest from Financial Reporter
Latest from Protection Reporter
to our newsletter

Join a community of over 20,000 landlords and property specialists and keep up-to-date with industry news and upcoming events via our newsletter.