Properties with poor EPCs out in the cold

Once the mainstay of many an investment portfolio, pre-war properties are rapidly falling out of favour with buy to let investors.

New legislation will require all privately rented properties to have an EPC rating of C or better by 2025 for new tenancies and by 2028 for existing tenancies.

Properties with an Energy Performance Certificate below level C are rapidly falling out of favour with private landlords according to a survey by buy to let lender Shawbrook Bank.

Shawbrook conducted a survey of 1,000 existing landlords to find out how this might affect future investment decisions. Their data showed that 25% would only consider a property with a rating of C or above. A further 24% said that they would prioritise properties with the potential to achieve level C. 15% said they would only consider properties built in the last 20 years.

One of the issues facing the sector is that a large proportion of the UK's housing stock was built before 1940, therefore unlikely to have a C rating. Estimates of the upgrade costs range from £6,000 to move from rating D to C - considerably more for those with a current rating of E or below.

Emma Cox, MD for real estate at Shawbrook said "It’s concerning to think that a significant proportion of properties within the private rental sector could fall out of favour due to poor EPC ratings and significant improvements needing to be made in a short period of time."

While legislation will impose change on landlords, astute investors will look towards future-proofing their properties. Separate research by property​ firm FJP showed that over 40% of people would pay more for an EPC C rated property, with that number rising to almost 60% amongst the under 35s.