A fifth of landlords to spend half a million pounds to meet EPC standards

Nearly one in five (19%) landlords have said they are planning to invest at least £500,000 over the next year in order to meet EPC (energy performance certificate) standards, a new study has found.

Research conducted on behalf of Handelsbanken surveyed professional investors with an average of 29 properties worth around £14m, and found that over half (55%) planned to invest at least £100,000 on EPC certification. All of those surveyed said they would be spending at least £1,000.

The majority (92%) of surveyed landlords expect the value of their properties to increase by at least 5% over the next 12 months. With £500,000 representing around 3.5% of the average portfolio, it is likely many will see the value increase cover investments into EPC.

Minimum Energy Efficiency Standards (MEES) were introduced by the Government in April 2018, but from April 1 this year, these regulations were tightened. It is now unlawful for a landlord to let a commercial property with an EPC rating of below E.

While over half (57%) of those surveyed were optimistic regarding their commercial properties meeting these standards by the deadline, over two fifths (44%) said they were only moderately familiar with the Government’s plan to increase the minimum standard for EPCs to B by 2030.

Richard Winder, head of sustainability at Handelsbanken, said: “Rolled up across a portfolio, these are not insignificant amounts, and for many investors represent a major step-up in capital expenditure. Beyond these MEES requirements, there are growing expectations on both landlords and tenants to take action on climate change and nature, and these are beginning to affect the economics of the rental market.”