Over two thirds of landlords (68%) said they would be less likely to buy a property with an EPC rating below C, revealed the latest research commissioned by Foundation Home Loans.
The data comes from the latest Q4 2022 BVA BDRC Landlord Panel research report, based off 752 online interviews with landlords.
Of the participants looking to buy in the next 12 months, 59% said they would be looking to buy a property rated C or above, while 29% said they would be buying those rated D through to E.
The research also revealed strong awareness of the proposed government requirements to increase the minimum EPC rating for domestic properties to C — 66% of landlords said they were aware of and understood the possible future requirements.
Some 25% claimed that they did not understand the details, while 9% said they were not aware of the proposed legislation at all.
In addition, two thirds of landlords stated they would carry out any works required to increase the EPC level of a property and continue letting it out.
When asked about the methods of funding they’d use to carry out the works, 62% said they would use savings, while 30% would put the rents up to cover the cost.
Meanwhile, 19% would seek a government grant or funding, and 10% would rely on a loan.
However, 20% said they would not carry out any works and seek to sell or not re-let.
According to the study, respondents believe that the average cost of upgrading the EPC rating for a property would be £8,300 — those with large portfolios claimed it would be closer to £9,000.
George Gee, managing director (commercial) at Foundation Home Loans, said: “It’s obvious from this research that existing landlords are not just far more aware of the EPC rating of their properties now, but they are actively making decisions based on those levels and are planning for a future in which many of them will have to spend money in order to improve those ratings.
“Previously, the EPC rating of a property made very little difference to its saleability, or indeed the way landlords viewed it for purchase, but a combination of factors — including the government’s intended measures in this area, the wider focus on energy efficiency, and the cost of utility bills — has drawn this into a much sharper spotlight.
“The good news is there are a growing number of lending options, from Foundation and others, which will be able to support landlords in upgrading properties.
“Advisers are going to be encountering far more landlords for which the EPC is a real determining factor in their purchase/remortgage decisions, and therefore it is imperative they have a good working knowledge of the measures and what products are available in order to support their clients in getting to their end goals.”
