The cost of getting private rental housing in England up to tougher EPC guidelines by 2025 is set to be around £19bn, new research by Hamptons on behalf of Bloomberg has revealed.
The study, which analysed data from the Department for Levelling Up, Housing and Communities, found that almost half of privately rented homes in England and Wales had an EPC rating of D or lower. The figure is the equivalent of 2.45 million properties.
According to Bloomberg, the average cost to improve energy efficiency for each home is estimated to be £8,000, leading to the multibillion-pound workload for contractors around the country.
Hamptons senior analyst David Fell said: “We are fast approaching the point where the deadline [to upgrade EPC levels] will need to be pushed back to allow landlords a reasonable grace period of time to carry out works.
“However, as things stand today, 49 per cent of all privately rented homes have an EPC rating of D or lower (compared to 47 per cent of all homes nationally). While the numbers have been falling, it remains nearly half the market, meaning an adjustment period will be required.”
Following consultation in late 2020, the government unveiled new standards for England and Wales that require homes rented under private tenancies to be upgraded by 2025.
From that date, properties that landlords want to rent out under new tenancies will need an EPC rating of C or higher. Properties that currently have tenants will have until 2028 to upgrade.
The Hamptons research found that London was the best-performing area of England and Wales in terms of quality of stock, with 58 per cent of rented homes achieving an EPC rating of C or higher. New homes also performed better than older housing stock.
The worst-performing area is Wales, with the data indicating that 58 per cent of privately rented homes had an EPC rating of D and below.
Fell added: “As may be expected, newer homes – those built after 2012 – tend to be much more energy efficient. Only 5 per cent of these homes were rated below band C.
“Even prior to the introduction of tighter requirements, landlords have steadily been upgrading their properties, with 41 per cent of privately rented homes where an EPC certificate was carried out in 2022 recording an increase from their previous rating.”