Green upgrades for rented homes ‘becoming too expensive’ for landlords

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Green upgrades for private rented homes are rapidly becoming prohibitively expensive for landlords, according to one UK bank.

They are already under pressure to raise properties’ energy efficiency standards – with expectations that rented homes could have to gain an EPC grade C for new tenancies by 2025 and for all tenancies by 2028 – but while they wait to decide whether to fund improvements, the cost of upgrading becomes more expensive by the day.

The BCIS Material Cost Index is forecast to reach 17.5% by the end of 2022 with a high degree of volatility across all material categories, says Mike Feasey, relationship director at Secure Trust Bank.

Private landlords also need to factor in the increase in labour costs for tradesmen to complete any retrofit work.

Landlord feedback

“We’re getting a lot of feedback from private landlords that high costs are proving a barrier when considering the benefits of upgrading their property’s energy efficiency credentials,” says Feasey.

“The cost of retrofitting existing buildings with green and sustainable measures will, in all likelihood, continue to rise and make it more difficult to recoup the cost of that investment throughout the remaining life of a property.”

With more than half of homes in England rated D or below for energy efficiency, he believes private landlords and investors still have options.

“Residential investment loans for investors to acquire or maintain an existing stock or release equity to fund further energy efficient residential projects are worth considering,” adds Feasey (pictured).

“Doing nothing is not an option because the danger is that landlords and investors will be left with properties that cannot be let and may prove difficult to sell.”

Earlier this year, research carried out on behalf of Paragon Bank revealed that one-third of landlords plan to quit the sector or do nothing to address energy efficiency failings if and when new EPC regulations kick in.

Read the ultimate guide to having a ecofriendly property.

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