Over two thirds (67%) of landlords currently own at least one property that does not meet the new requirements for the Government’s proposed EPC targets, Foundation Home Loans has found.

The firm’s Q3 2024 landlord trends research comes after the Government announced that it will shortly consult on proposals for private and social rented homes to achieve EPC C or equivalent by 2030.

Currently, private rented homes can be rented out if they meet EPC E, while social rented homes have no minimum energy efficiency standard at all.

Although Foundation found that 92% of landlords have some knowledge of the requirements, only two thirds (67%) reported a thorough understanding of the details.

Portfolio landlords with four or more buy-to-let (BTL) mortgages demonstrated slightly lower comprehension of the potential regulations, with 62% stating they fully understand the requirements, compared to 69% of unencumbered and consumer borrowers.

Foundation’s survey, which was conducted through 720 online interviews, revealed that 42% of landlords intend to make the necessary improvements to bring their impacted properties up to standard.

Of these, 24% were planning to carry out works at the minimum costs required to comply and continue to let the property out.

A further 14% said they aim to carry out the works that maximise the long-term value of the property while continuing to let it out, and 3% said they will carry out the works and then sell the property.

In contrast, a third (34%) are planning to sell without undertaking any working or not re-let the property and 3% said they don’t plan to carry out any works but continue to let out the property.

Director of sales at Foundation Home Loans, Grant Hendry, said: "With potential new legislation aiming to raise energy efficiency standards and tackle fuel poverty for millions, landlords face important decisions around future-proofing their investments from an EPC perspective.

"Thankfully, this research helps demonstrate growing awareness among landlords around this topic and highlights both the financial and planning considerations involved in meeting these requirements. It also underlines the tremendous potential for lenders and intermediaries to support sustainable practices in the BTL sector, particularly through tailored green mortgage products that align with both regulatory demands and landlords' unique needs."

When planning for these changes, Foundation said that the financial commitment is "significant", with landlords estimating an average cost of £12,000 per property to achieve an EPC C rating.

However, 13% of landlords were uncertain about the specific improvements needed, while 37% were unsure of the total potential cost per property.

Hendry concluded: "As landlords adopt varied approaches to meet these standards, ranging from minimal-cost upgrades to comprehensive property improvements, it’s clear that personalised guidance is essential.

"Green mortgage solutions can offer landlords a strategic way to finance these upgrades, enhancing property value and reducing long-term costs."

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