Landlords

Bringing all landlords up to speed on EPC changes remains challenging: MAE London

Speaking at today’s Mortgage Adviser Event in London were Nationwide’s Daniel Clinton (head of specialist lending) and Robert Stevens (head of property risk), who shared their findings on the impact of changing EPC regulations on the private rental sector.

Amy Loddington
25th May 2022
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A poll conducted by Nationwide showed that roughly a third of landlords are either only somewhat aware or entirely unaware of the changes at all – and Stevens said one of the biggest challenges facing brokers was shifting that mindset, adding :

“A big job for us is educating people. More people know the EPC rating of their fridge than their house – we need to help change that.”

Of those who are aware, the biggest challenges in meeting the new requirements were: constraints with the property itself (52%), levels of disruption (44%), limited payback on investment and (44%). Just over a quarter – 27% - say that lack of funds is the biggest challenge.

The changes have also had unintended consequences – namely, reduced supply to the PRS, landlords becoming trapped with their current lender due to being below the EPC threshold, and landlords with lower-rated properties becoming financially disadvantaged.

Stevens concluded: “Lots of [landlords] are not going to see an increase in their property value after retrofitting and are potentially going to push to the owner-occupier market on the basis that regulations there are 10-15 years behind. We’re then going to see them shifting over and the number of private rental properties available decrease, and potentially see a shortage.”

“We also have the potential of mortgage prisoners, where landlords are trapped with their mortgage lender or on an undesirable rate as their property’s rating stops them getting a mortgage with another lender – a good example of this is the current G and F rated properties, where the same is happening.”

“One of the things we have fed back to the Government as part of their consultation on this is that the £10,000 cost cap is fine if you have a property in Kensington or Richmond, where this might not touch the surface – but if you’ve got a property in the North East, are you going to want to spend £10,000 on it? Probably not, and if you do you might wipe out several years of returns.”

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