Shawbrook Bank

Majority of landlords look to pass EPC improvement costs on to tenants

Over half of landlords said that they will pass at least some of the costs to improve their properties’ EPC rating onto their tenants, revealed new data from Shawbrook Bank.

The bank’s 'Confronting the EPC Challenge' report showed that 68% of landlords are currently considering this option, which will could result in higher rents for tenants.

Only 23% of landlords said they will not pass any costs to their renters.

When asked how much they believe they would need to spend on making the necessary improvements, landlords estimated that it would cost £5,900 on average to improve their properties.

However, the report states that this figure could be significantly underestimated, as landlords who have already made improvements to their properties have spent £8,900 on average to date. 

Wider market issues such as labour and material shortages could also cause landlords’ final bills to rise.

Emma Cox, MD of real estate at Shawbrook Bank (pictured above), said: “Landlords will need to strike an important balance when it comes to making the necessary energy efficiency improvements to their properties.

“While work needs to be carried out quickly to prevent any void periods during a tenancy, having a clear plan in place as to how they will fund any necessary works is crucial. 

“Our research has shown that landlords may be underestimating the costs involved, leaving them open to unexpected bills — as a result, tenants could be caught in the crossfire as landlords seek to recoup some of the costs. 

“While tenants can expect to benefit from cheaper energy bills as a result of greater energy efficiency, any savings on bills could be outweighed by a market-wide rent rise in 2025.”

Emma advised landlords who may be unaware of the level of work and costs necessary to improve properties to speak to a mortgage broker and lender as soon as possible about this.

“Understanding when they need to begin works to meet the proposed deadline will allow landlords the opportunity to fully assess their options and funding requirements,” she added.

"Landlords have a key part to play in the drive towards a greener future for the UK; while challenges and questions still remain, bringing the wider market together to educate landlords and support tenants during the process will help to mitigate some of the upcoming challenges.”

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