Expert believes more innovation and education is needed
An estimated 71% of landlords are unlikely to buy a property with an energy performance certificate (EPC) rating below ‘C’, according to Foundation Home Loans.
So, how are low EPC rated homes performing at present and how could this impact the first-time buyer market?
Mortgage Introducer reached out to an expert to find out.
What will happen to low EPC rated homes?
Grant Hendry (pictured), director of sales at Foundation Home Loans, said the decision by the government to effectively scrap the 2025/2028 deadline for a higher standard of EPC on all private rented sector properties, means that landlords do not necessarily have to improve the EPC level of properties below that level.
“In that sense, it will keep supply in the market, but there is also much to be said about the wider benefits of properties being at a higher EPC level, not least the benefits to consumers in terms of energy efficiency and hopefully cheaper energy bills, but also the benefits to landlords who get access to cheaper green mortgages,” he said.
Of course, Hendry said, no-one wants to see a further shortage of supply in the private rented sector, but neither should backs be turned on the green agenda.
“From my view we, as an industry, need to keep innovating, educating, and working with other stakeholders to ensure there are more solutions to help more landlords make the improvements to their properties which remain necessary,” Hendry said.
The last couple of years, he added, have shown what an energy crisis can mean in terms of an individual’s utility bills.
As such, Hendry said every household has a duty to focus on the ways and means of running a home in the most energy efficient way possible.
Plus, of course, he added that the carbon emanating from UK property is one of the key contributors to the country’s emissions, which needs to be tackled at some point.
“What I can envisage is, where landlords want to sell up and where those properties are below ‘C’, other acquisitive landlords will now be more interested in purchasing those properties because they will be able to carry out the work necessary, they will be able to improve the energy-efficiency, and they will then be able to access green mortgages,” he said.
Additionally, Hendry said it is clear that those private rented sector properties which are above ‘C’ are going to be more in demand from tenants, because of the cheaper bills they should generate.
The other important point to recognise, Hendry said, is the fact that the country is likely less than a year away from a General Election.
There is every chance we might see a change in government, according to the polls, and, with that, Hendry said, is likely to come a change of policy, or at least a return to the policy that we never quite got to see on the statute books.
“Also, from what I am aware, there is no change in Scotland, they are still requiring landlords to meet EPC level C by 2025/2028, and I would not be surprised if this was reinstated across the board if we have a change in government,” he said.
Could the higher EPC rating push impact first-time buyers?
Hendry is not so sure the trend toward higher EPC rated homes will drastically impact the first-time buyer market.
However, he said there will always be some first-time buyers willing and able to buy homes which were previously in the private rented sector and are now up for sale.
“In fact, there is a very good argument to suggest these properties need to stay in the private rented sector, and, traditionally at least, that is what has happened,” he said.
As we know, Hendry said the situation for individuals who want to buy a first home is not great, in terms of house prices still being high, the deposit levels required, and affordability challenges.
“That is why it is so important that we have a strongly-supplied private rented sector that provides plenty of housing options for those who cannot, at the moment, get on the ladder, or lest we forget, do not want to purchase a home right now,” he said.
How have you seen the push toward higher EPC rated homes affecting the market? Let us know in the comment section below.
