The property consultancy Fisher German is urging the government to provide more clarity on the future of Energy Performance Certificate (EPC) regulations, which may affect thousands of landlords and tenants across the UK.

The EPC regulations, which aim to improve the energy efficiency of rental properties, have been under scrutiny by the new housing secretary Michael Gove, who has hinted at relaxing the timescale and scope of the rules.

He said that the current regulations are putting unrealistic pressures on landlords, especially those with older properties that may require significant investment to meet the standards.

The government has since announced that the EPCs need ‘fundamental reform’ and acknowledged that some properties may be ‘physically impossible’ to upgrade to the required level – without saying what those reforms should be.

Shortage of rental properties as landlords sell up

Fisher German partner Neil Hogbin, who leads the firm’s property management team, said: “We are already beginning to see a shortage of rental properties in the marketplace as landlords start to sell up.

“Combined with the increase in energy prices because of the war in Ukraine, there is a further threat that rents will continue to rise to cover some of the costs of the EPC improvements being forced upon private landlords as they scramble to meet the new energy efficiency targets being set.

“Decent homes in the private rented sector will no longer be affordable to many.”

He added: “We all want to see properties as energy efficient as possible, but the sector needs certainty about how and when this will happen.”

Landlords are facing costs of up to £15,000 per property

Along with no certainty over what to expect from the EPC regulation, Mr Hogbin says landlords are facing costs of up to £15,000 per property to achieve the proposed energy efficiency targets.

This could, he warns, have a significant impact on a landlord’s profitability and cash flow.

He also said that landlords need to be aware of the potential implications of the EPC regulations on their property portfolios and plan for any necessary improvements.

He advised landlords to seek professional advice from property consultants and surveyors on how to assess and enhance the energy performance of their properties.

‘Landlords are looking for a financial package’

Mr Hogbin said: “Landlords are looking for a financial package to support improvements in the private rented sector but, it is all still very unclear.

“Meanwhile, the owner-occupied housing sector has no minimum energy efficiency requirements at all.

“Many of the EPC changes are simply not practical, affordable, or wanted by many tenants – particularly those in period properties.”

He added: “It is seen as unfair that the private sector landlords, many of whom provide high-quality well-managed homes, should have to deliver on EPC targets ahead of other housing market sectors.

“They are already taking steps to be more environmentally conscious with low-carbon heating systems, and well-insulated homes where sensible and cost-effective to do so and shouldn’t need to be regulated to deliver on this.”

Landlords are responding to the demands of EPC regulations

According to Rightmove, landlords are already responding to the demands of EPC regulations by investing in properties with an EPC rating of C or above and avoiding lower-rated ones.

The online property portal also reported that 80% of landlords are aware of the proposed changes to the EPC legislation, compared to 65% last year.

The EPC regulations are part of the government’s wider strategy to reduce greenhouse gas emissions and tackle climate change.

The government has set a target of achieving net zero carbon emissions by 2050 and has pledged to make all homes as energy efficient as possible.