Landlords looking for broker support with EPC improvements fast approaching
Jon Cooper is head of mortgage distribution at Aldermore
While full normality in the UK may still be a few steps away, there appears to be a growing sense of optimism among landlords, with the feeling that the worst is behind us.
New landlord survey data from BDRC BVA shows, while half of landlords report their lettings business has been negatively impacted by the pandemic, landlord confidence is at a five year high.
The growing optimism is very welcome and I share the sentiment, but it’s important to talk about points of action needed to ensure this positivity continues as we look at what’s next for the sector.
It’s vital as an industry that we identify future roadblocks and act quickly to mitigate difficulties in the transition, and right now the looming change on the horizon is EPC ratings.
At present, domestic private rental properties must be an energy efficiency EPC rating of E or above. However, this changes in 2025, when all newly rented properties will be required to have a certification rating of C or above, with existing tenancies needing to comply by 2028.
It’s never too early to engage landlords on what is needed to be done. Getting a rental property up to standard will, for many, take time and in some cases significant funds. We’re seeing a wide spectrum of changes that may be required.
From simple things like replacing lightbulbs with high efficiency ones, to substantial and time consuming projects like replacing the central heating, rewiring, the installation of new boilers, and double glazing the windows.
Many landlords are currently actively looking for advice on how to manage their portfolios. BDRC BVA data suggests that in the next 12 months, one in five are looking to expand their portfolios and a third looking to remortgage.
With three quarters of these landlords saying they will use a broker for this activity, it’s the perfect opportunity for many brokers to begin conversations with their clients about the EPC ratings of their properties. For those needing large scale renovations, a plan that could take two to three years to complete may be needed.
Taking EPC ratings into account will be a great benefit to landlords. It will ensure they get the right portfolio management and remortgage deals, not just for their current business needs, but also to consider any additional funds required to comply with the new rules before the deadline.
Further to this and more broadly, business resilience should be a priority for every landlord. Aldermore research found in 2020 almost 6 in 10 landlords used their savings to recoup losses from new rental arrangements.
Building up savings for periods of tenant change, unexpected costs, and renovations will bring great value in relieving stress during these times, alongside being useful for future investment opportunities and making finances more stable and resilient.
As people’s lives revolve more around their homes than ever before, and this is set to continue to be the norm, the value of a robust private rented sector has never been better illustrated than the past 18 months.
The looming change to EPC ratings may fill some with dread, but the more support landlords receive from brokers and lenders now, the easier it will be to navigate those challenges.
This will enable us to continue to deliver a robust and diverse private rented sector that, due to the increased emphasis on our living spaces going forward, people will need more than ever.