Investors expect to pay an average of £10,400 per property to get their homes up to an Energy Performance Certificate level of at least C.
Worryingly for landlords, most (71%) expect to carry out the works using savings. Only a quarter (25%) expect to use government funding, though a similar proportion (23%) plan to put up the rent.
It remains to be seen whether the government unveils a new scheme similar to the scrapped Green Homes Grant. So far the authorities have pledged to offer grants of £5,000 to install heat pumps and other low carbon systems, though these changes have little impact on the EPC rating.
Around four in 10 rental properties have an EPC rating of D or lower.
The research comes from BDRC BVA, on behalf of Aldermore Bank.
Jon Cooper, director of mortgage distribution at Aldermore, said: “With people’s lives revolving more around their homes than ever before, a robust private rented sector has never been more vital.
“The data suggests the looming EPC change will cause challenges, but the more support landlords receive from brokers and lenders now, the easier it will be to navigate.
“Encouragingly, awareness appears high among landlords so many will be thinking about what changes may need to be done already.
“As we move towards a post-pandemic environment, many landlords will be looking to the future, so it is the perfect opportunity for brokers to have conversations with their clients about the EPC ratings.
“This will ensure, where needed, a plan for financing can be mapped out to assist landlords in getting non-compliant properties up to standard.”
Only one in eight (13%) landlords say they are not aware of the future EPC changes. Three in five (62%) landlords say they have a thorough understanding of the changes, with a further quarter saying they are somewhat aware but haven’t dug into the full details yet.
Aldermore Bank reckoned the upcoming changes will push more investors into buying new builds, because they tend to be more energy efficient.
Some landlords plan to do the minimum required, while others are more ambitious about making EPC improvements.
Over a third (35%) would carry out works at the minimum cost required to comply, whereas a third (32%) foresee spending what is needed to maximise the long-term value of the property, even if it exceeds minimum requirements.
One in seven (15%) say they will not carry out necessary costs and either seek to sell or not re-let, and 2% will carry out the works to bring it up to standard and then sell it.