Landlords are increasingly turning to lenders for support as they prepare for potentially costly energy efficiency upgrades, Pegasus Insight has found.

The firm’s latest Landlord Trends research revealed that landlords estimate that it would cost an average of £11,713 per property to bring their rental homes up to the proposed EPC C standard. This is set to create what could become one of the biggest financing challenges facing the private rented sector (PRS) in the coming years.

With 60% of landlords owning at least one property rated below EPC C, Pegasus said the scale of the potential investment requirement is significant.

Despite the cost, 62% of those affected say they intend to carry out the necessary improvements, up from 13% in the previous quarter, suggesting an increased appetite to invest in improving the quality and energy efficiency of rental housing.

More than two-thirds of landlords expect to use savings to cover at least some of the costs, while others are already exploring alternative funding options.

Almost one in four hope to gain access to Government grants or support schemes, while others expect to rely on additional borrowing, further advances or equity release from existing properties.

When asked what would make EPC improvements more achievable, landlords identified a range of financial solutions including further advances, dedicated green finance products, preferential rates for energy-efficient properties and simpler access to funding for retrofit projects.

Founder and managing director at Pegasus Insight, Mark Long, stated: "For many landlords, the question is no longer whether properties need to become more energy efficient, but how those improvements will be funded.

"Most landlords are willing to invest, but the costs involved are substantial. Our research found that landlords believe energy efficiency improvements become financially unviable at around £9,000 per property, yet they estimate the cost of achieving EPC C will average almost £12,000. That leaves a significant funding gap.

"Many landlords are actively looking for financial support to bridge that gap, creating a significant opportunity for lenders to help unlock investment across the PRS. The most successful solutions are likely to be those that make retrofit funding simple, accessible and commercially viable for landlords."

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