Key announcements from the Government mean that landlords now have less time to make necessary EPC changes and are expected to spend more on the works. Here’s what you need to know.
The Government has been busy creating new hoops for landlords to jump through, with a tougher Renters’ Rights Bill and now further challenges with EPC reforms.
Below are the latest updates landlords need to know about EPC deadlines and price caps.
EPC Deadlines
We had been under the impression that all landlords had until 2030 to improve their properties’ EPC rating to C or above. However, the latest government consultation reveals that properties with new tenancies must have an EPC rating of C or above by 2028.
The deadline for properties with existing tenancies remains 2030. This extended deadline intends to give landlords the necessary time to implement energy efficiency improvements.
The new law is expected to be enacted in 2026, with the final cost cap to be announced at the same time. This will include new EPC software and training sessions, explicit standards for landlords to meet, and proper guidance for the Private Rental Sector.
EPC Spending Caps
The government recognises its predecessor’s failure to establish a stable, realistic cost cap for energy efficiency improvements that isn’t increased by inflation. Therefore, they plan to provide greater certainty with next year’s finalised decision.
The current proposal is a maximum spend of £15,000 (inclusive of VAT) per property. Based on 2024 prices, the average amount landlords will need to spend per property sits at £6,100 to £6,800.
The deadline changes, and higher spending caps make this an unrealistic proposal for portfolio landlords. We hoped the Conservative’s rumoured £10,000 cap would be brought forward. However, Labour feels this limits the overall impact of the reforms.
Funding EPC improvements
For landlords feeling overwhelmed by the Government’s announcements, some finance solutions are available to help.
· Remortgage with capital raise
· Further advance
· Short-term finance
· Second charge lending
Depending on your current mortgage and the equity in your portfolio, you may be able to fund the works with a remortgage. This could involve releasing capital from one of your properties to cover the costs of the energy-efficiency improvements. This is a straightforward process, but
you must consider any early repayment charges (ERCs) on your current mortgage deals. Speak to your broker if you’re unsure.
If your ERC period is far off, a further advance allows you to borrow more from your existing lender without breaking from your initial rate. This saves you any ERC penalty fees.
Many landlords fund EPC improvements with a bridging loan, which is an excellent option for those looking to quickly improve a property before letting it out to tenants or remortgaging. However, it’s important to remember that this can be an expensive route.
Alternatively, you may take a second charge against a property, allowing you to pay for the work on a second loan and keep your current rate.
Finding the right funding for you
With so many options available, it is essential to speak to a professional broker to explore the right finance option for your circumstances. Our experts can review your portfolio and calculate the most cost-effective option for your needs. To get started, call 0345 345 6788 or submit an enquiry here.
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