Over half of landlords said that they will pass at least some of the costs that it will take to improve their properties’ energy efficiency rating onto their tenants.
Landlords reckon it will typically cost £5,900 to improve their properties, though so far landlords who have upgraded their homes have spent £8,900 on average.
Shawbrook noted, in its Confronting the EPC Challenge report, that wider market issues such as labour and material shortages could also cause landlords’ final bills to rise.
The government plans to make it so landlords have to bring properties up to an EPC level of C for new tenancies by 2025 or 2026, as well as for existing tenancies by 2028.
Emma Cox, managing director of real estate at Shawbrook Bank, said: “Landlords will need to strike an important balance when it comes to making the necessary energy efficiency improvements to their properties. While work needs to be carried out quickly to prevent any void periods during a tenancy, having a clear plan in place as to how they will fund any necessary works is crucial. Our research has shown that landlords may be underestimating the costs involved, leaving them open to unexpected bills.
“As a result, tenants could be caught in the crossfire as landlords seek to recoup some of the costs. While tenants can expect to benefit from cheaper energy bills as a result of greater energy efficiency, any savings on bills could be outweighed by a market wide rent rise in 2025.”
The one positive for renters is more energy efficient features can lower bills, through better insulation, energy-saving appliances, heating controls and energy-efficient windows.
On the flipside the escalating cost of energy – with the energy price cap increasing by 54% in April –may swallow up some of these savings.
Cox added: “For landlords unaware of the level of work that may be needed on their property, or properties, as well as any associated costs, speaking to a mortgage broker or lender sooner rather than later could help to paint a clearer picture. Understanding when they need to begin works to meet the proposed deadline will allow landlords the opportunity to fully assess their options and funding requirements.
“Landlords have a key part to play in the drive towards a greener future for the UK. While challenges and questions still remain, bringing the wider market together to educate landlords and support tenants during the process will help to mitigate some of the upcoming challenges.”