“Buy-to-let-go”: Thousands of landlords sell up in a bid to avoid costly EPC changes
David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading property tax experts, discusses the impact of the new EPC changes fuelling an exodus of British buy-to-let landlords.
Key statistics:
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- Just 1-in-5 landlords say their investment has been a profitable one in 2023
- A further 1-in-5 say they became landlords without the sufficient knowledge and lost thousands as a result
New data has revealed that thousands of buy-to-let landlords have begun selling their properties ahead of the government changes to Energy Performance Certificate (EPC) regulations.
This comes as Cornerstone Tax has found that just 1-in-5 landlords now say their investment has been a profitable one, with a further 1-in-5 admitting that they have lost thousands.
As a result, 65,000 rental properties went up for sale in the first three months of 2023, 36,460 of those holding an EPC rating of D or less. Considering the growing evidence that landlords are selling up due to increasing costs, property expert, David Hannah, gives his thoughts on how these new changes will affect the property market.
By 2028, Landlords must ensure that their properties hold a minimum EPC standard rating of ‘C’ or higher, or face fines of up to £30,000. It’s reported that to get their property’s EPC rating from ‘E’ to ‘C’ will cost upwards of tens of thousands of pounds, with many landlords expected to make costly changes such as installing heat pumps, double glazing, and installation.
Hannah points out that the expensive upgrades will make it difficult for landlords to maintain a viable letting portfolio – especially if they must spend money on a property that isn’t worth much more than the cost of the upgrades.
Furthermore, Hannah points out that the increasing government red tape is forcing landlords out of the market when demand for affordable homes is at an all-time high and stock is at historic lows. As such, landlords have been playing a vital role in offering Brits accommodation when mortgage inflation has forced many into being unable to afford to get on the property ladder.
David Hannah, Group Chairman at Cornerstone Tax, discusses the current landscape of the rental market and the impact of the EPC changes:
“Under the changes to the EPC ratings for buy-to-let properties, only 0.2% of UK landlords would qualify for government funding.
“As a result, landlords are now under significant pressure to upgrade their properties by 2025, and by 2028 all existing tenancies will require the property to have a rating of “C” or above.
“You must make sure your buy-to-let property meets national and local standards, and this may not be an easy, trouble-free experience.
“For most landlords, getting their EPC standards from E to C will come at a considerable cost.
“To get your rental property up to scratch, some improvements you could make include energy-efficient lighting, improved wall and roof insulation, a more efficient heating system, a minimum of double-glazing windows, or, if you have them already, triple-glazing, alongside less wasteful domestic appliances and even solar panels.
“Overall, I believe getting all rental properties to a standard EPC rating of “C” will be far too costly for landlords, and as a result, there must be more government funding. We are currently experiencing a huge demand for rental stock at a time when there is worrying undersupply, and I fear this will only worsen as more landlords look to sell.
“I advise landlords to work out how much it will cost them to make these changes and offset the time it will take for their investment to pay off.
“I think the rental market is filled with uncertainties at the moment, with rising rents making it less attractive from a renter’s standpoint and rising house prices making it less desirable for buy-to-let landlords to grow their portfolios.
“Our research shows that many landlords were not prepared to deal with the current obstacles facing the rental market as 1 in 5 say they became landlords without the sufficient knowledge needed and have lost thousands as a result.”
Kindly shared by Cornerstone Tax
Main article photo courtesy of Pixabay
