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An analysis by Paragon Bank shows that landlords in the private rental sector (PRS) have increased by 165% the number of homes with an energy performance rating (EPC) from A to C over the past decade.
Paragon says this is part of a wider improvement in standards across the sector.
Government data show that 1.925 million rental properties in England are EPC AC rated, up 1.2 million from 2011.
A new report, Raising the Standard for Private Rented Properties, says 44.5% of PRS properties are rated A to C, compared to 42.9% in the owner-occupied sector.
Landlords are investing in homes that benefit from energy efficiency improvements in anticipation of the government’s proposed A to C minimum requirement legislation.
This is along with the cheaper running costs typically associated with more energy efficient homes.
Paragon reported a 44% increase in lending over A to C rated rental property in its latest financial year to £832.2m.
Under government proposals, properties leased under new leases must have an A to C EPC rating from 2025, and all types of leases from 2028.
However, more than two years have passed since the proposals were made, and the industry is waiting for an update from the newly created Department of Energy Security and Net Zero.
Paragon emphasizes that if all properties are upgraded by the proposed April 1, 2025 date, approximately 3,130 homes would need to be upgraded to EPC C per day.
This increases to 4500 if only business days are included.
The bank says the improvement in the PRS home energy rating reflects a broader increase in standards across the sector.
In 2008, 44% of homes in this sector were found unacceptable by the England Public Housing Survey. Now this figure is 23%.
The addition of good quality homes has reduced the amount of poorer housing. In 2008, 1.8 million privately rented homes were classified as decent, and that number increased to 3.3 million in 2021, an 83% increase.
The number of objects classified as obscene has also been reduced from 1.4 million to 990 thousand, i.e. by 29%.
Richard Rowntree, Mortgage Managing Director of Paragon Bank, comments: “PRS is too often associated with substandard housing, and this is simply not true. In recent years, landlords have achieved higher standards, which is reflected in the increase in the number of energy-efficient properties rented out.”
“However, landlords and the broader industry serving the private rental sector now need more clarity on government proposals for minimum EPC levels.”
“It has been more than two years since government consultations closed, and since then a vacuum of information or guidance has created uncertainty and confusion.”
“We believe that the currently proposed timeline is unacceptable as there is no infrastructure to support the modernization of more than 2 million facilities in such a short period of time.”
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