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Landlords have welcomed the scrapping of proposed tighter energy efficiency rules for rented homes, but expressed concern over the impact of policy uncertainty on future investments.
Prime minister Rishi Sunak this week said the government would not go ahead with plans to require landlords to upgrade their properties to EPC C grade or above as early as 2025.
The move drew criticism from environmental and tenant groups, but was mostly cheered by landlords, despite worries about what the government might do in the future to meet its climate goals.
Jo Eccles, managing director of Eccord, a central London buying agency that manages a large portfolio of properties for landlords, said: “I think they are all feeling very relieved that they haven’t spent money on regulation that hasn’t come in.”
She added: “Until they have to spend money, they often don’t spend money.”
The National Residential Landlords Association (NRLA), which represents landlords, also welcomed the respite, but said the prime minister’s announcement left property owners uncertain about what rules they might have to meet in the future.
“The question is whether this has completely been consigned to the dustbin or whether the policy is going to be recycled at some point in the future either with different timelines or standards,” said Lucian Cook, head of residential research at Savills.
“It is right at the heart of this conflict between getting towards net zero and understanding exactly where the financial burden will be. If you are going to make a dent in carbon emissions, you are going to have to take a look at the UK’s housing stock at some point,” he said.
The residential housing sector accounted for 17 per cent of all UK carbon dioxide emissions in 2022, according to government statistics.
Currently, landlords mostly cannot rent out properties with EPC ratings below E. The government consulted in late 2020 about tightening the standards for homes in England and Wales to EPC C by 2025 for new tenancies and 2028 for existing lets, but never confirmed the new rules — which Sunak said will now not go forward.
The government had been under pressure to ease the financial strain on landlords, as rising mortgage costs threaten to force property owners to sell up, reducing the supply of rental homes and pushing up rents. Private rents rose by a record 5.5 per cent in August from the year before, according to Office for National Statistics data.
In Westminster, critics accused the government of delaying the renters reform bill, which would end “no fault” evictions, because of concerns among Tory MPs — some of whom are landlords themselves.
The prospect of having to make expensive energy efficiency upgrades, including possibly insulation and double glazing, was another financial problem for landlords, which the government has now removed.
The decision was condemned by environmental advocates. “Delaying green policies just means they’ll have to be implemented much faster, later, pushing up the cost for everyone,” said Simon McWhirter, deputy chief executive of the UK Green Building Council, an industry association supporting sustainable construction.
Generation Rent, the tenants campaign group, condemned the government’s decision as “cruel and irresponsible”, saying the lack of standards would leave tenants in damp and draughty homes, contributing to ill-health and the cost of living crisis via high fuel bills.
The NRLA called on the government to produce a clear plan to improve energy efficiency in rental homes, including “appropriate financial support and reform of the tax system”. The group has called for all energy efficiency improvements to be made tax deductible for landlords.
