Government Makes a U-Turn, Cancels Plans for EPC Upgrades
Posted on Sunday, 24 September, 2023
Rishi Sunak has officially confirmed the growing speculations regarding the government’s intention to ease certain critical green policies, specifically the proposed minimum Energy Performance Certificate (EPC) standards for rental properties. These standards were expected to impose significant costs on landlords.
In his address, Sunak pointed out the substantial expenses associated with upgrading homes and indicated that these costs might ultimately be transferred to tenants in the form of higher rents. Consequently, the government has opted for a different approach, offering financial incentives to landlords and homeowners to encourage property upgrades. This effectively postpones the planned EPC changes originally set to apply to existing tenancies in 2028.
A recent survey conducted by boiler repair company Fair Fix revealed that only one in five property owners supported the proposed ban on gas boilers. An overwhelming 94% of respondents believed they should retain the authority to select the type of energy source for their homes.
The news of this government U-turn has prompted swift reactions from industry experts and stakeholders. Here are their responses:
Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA), expressed the association’s desire to see all properties achieve the highest possible energy efficiency levels. However, he highlighted the uncertainty surrounding energy efficiency policies, which has had a detrimental impact on the availability of rental properties. Beadle emphasized the need for a comprehensive plan from the government that supports the rental market in making the desired energy efficiency improvements. This plan should include appropriate financial support and tax system reforms to encourage investment in energy efficiency measures.
Jonathan Daines, Founder and CEO of lettingaproperty.com, acknowledged the government’s U-turn as welcome news for some, but noted that many landlords had already taken proactive steps to improve energy efficiency in their properties. Some landlords had incurred significant costs and practical challenges to align with the proposed EPC minimum standards. Daines pointed out that this had led to some landlords exiting the market, resulting in reduced rental property supply and higher costs for tenants. He emphasized the need for policymakers to provide clear and consistent rental property regulations.
Nathen Emerson, CEO of Propertymark, stressed the importance of forward planning to balance the economic aspects of net-zero targets. He called for legislation that incentivizes and encourages property owners, investors, and landlords to make the necessary changes. Emerson emphasized the necessity of transparent communication with clear timelines for expectations, considering both new construction developments and retrofitting measures for existing buildings.
Paresh Raja, CEO of Market Financial Solutions, noted the complexity of the issue surrounding the scrapping of impending EPC regulations. While some landlords might be relieved not to face immediate substantial costs, those who have already invested in energy efficiency improvements may feel frustrated. Raja pointed out that the next general election could result in the reintroduction of new EPC rules, introducing further uncertainty to the property market. He emphasized the importance of long-term reforms and greater clarity within the property sector.
Emma Cox, Managing Director of Real Estate at Shawbrook Bank, acknowledged that the government’s decision to postpone EPC regulations might provide short-term financial relief for landlords who hadn’t yet invested in energy efficiency improvements. However, Cox emphasized that energy-efficient buildings would remain vital for achieving net-zero goals, even if the rules were not changing as early as 2025. She highlighted the benefits of energy-efficient properties for attracting tenants, reducing void periods, and preparing for future legislative changes.
Ben Thompson, Deputy CEO of Mortgage Advice Bureau, pointed out that the UK still needs to upgrade its aging and inefficient housing stock to meet net-zero targets. He cautioned that backtracking on energy efficiency policies would not solve the overall problem but merely delay necessary actions.
Michael Cook, Group Managing Director of Leaders Romans Group, welcomed the changes as a relief for homeowners and landlords, particularly in the short to medium term. He recognized that the continuous imposition of taxation, legislation, and inflationary pressures on landlords had led to many exiting the market. Cook highlighted the positive impact of reducing capital expenditure on rental properties.
Simon McWhirter, UKGBC Deputy Chief Executive, expressed concern about the government’s U-turn on energy efficiency policies, emphasizing that delays would result in faster, costlier implementation down the line. He stressed the importance of insulating homes for both environmental and health reasons, as excess cold is a significant hazard in many privately rented homes.
Gillian Charlesworth, CEO of the Building Research Establishment (BRE), expressed concern that the government’s delay in implementing energy efficiency measures could hinder efforts to combat climate change. She emphasized the importance of transitioning to clean heat and the role of heat pumps in achieving net-zero targets.
The government’s decision to revise its green policies has elicited a range of reactions, highlighting the complexities and challenges associated with achieving energy efficiency and net-zero goals in the UK.