Will the EPC U-turn make it better in the long run?
Back in September, Rishi Sunak made a major announcement: he was scrapping the government’s Energy Performance Certificate (EPC) policies for landlords. These policies were set to require newly rented properties to have an EPC rating of C or above by 2025, and existing rental properties to have the same certification by 2028. This move was not unexpected, as there had been much friction over the costs associated with implementing the policies.
The Bigger Picture
For landlords, Sunak’s U-turn has provided some much-needed breathing space after a challenging year. One key issue was the cost of making necessary changes – according to the English Housing Survey, 46% of private rental homes would need to spend between £5,000 and £9,999 to reach band C, with others facing costs of over £15,000. However, other estimates were significantly higher, with some predicting average costs of £25,000 nationwide.
Industry Reaction
Lea Karasavvas, Managing Director of Prolific Mortgage Finance, views the U-turn as a reprieve: “The delay comes as good news for landlords and ultimately good news for tenants as it gives them more assurance of remaining in their home. Many landlords had considered asset stripping, due to the tight deadline initially of 2025 and hopefully the abandoned target eases that burden, therefore giving them more confidence in their ability to retain their properties and allow their tenants to remain in their homes.”
Despite this, Lea also notes that many landlords and brokers are still in favour of green policies. “Whilst I do believe that energy efficient properties and ‘green’ properties should continue to be supported, it does ease the burden on landlords and hopefully results in a reprieve that will allow those fearful of the financial hit more time to plan these changes, and less of a need to sell up and cash in. Moreover, it gives tenants more stability and less likelihood of the need to re-home as landlords may now hold, with more capital reserves to manage the payment shock of increase costs of borrowing, that they may not have otherwise had.”
An Opportunity to Reset
The U-turn provides landlords with a chance to take stock and assess their options, as well as their finances. With September’s base rate freeze and the possibility of rates falling, this could free up some capital, enabling landlords to upgrade their properties. It also gives policymakers the time to stress test flaws and ensure that any future legislation is achievable, and not to the detriment of landlords.
Solutions from MT Finance
At MT Finance we remain committed to supporting landlords and investors. If you are looking to access finances to fund an update to any of your investment properties, a bridging loan could help you unlock equity quickly. Our light refurb bridging loans offer up to 70% loan-to-value and can sit as a first or second charge. Terms are available between one and 24 months and the lack of exit fees or early repayment charges gives you total flexibility when it comes to repaying your loan.
If you’re interested in finding out more about our light refurb bridging loans, call us on 0203 051 2331 or send us a query online and a member of our team will be in touch with you shortly.