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Minimum energy rating increase for rental sector ‘will lead to housing shortage’

Government move has not been thought through, says The Lettings Industry Council, as industry body calls for phased approach.

Richard Reed

Energy ratings

Plans to increase the minimum energy rating for rental properties by 2025 have come under fire from a leading industry body.

The Lettings Industry Council (TLIC) says the timeframe to achieve a minimum C rating is too short, and runs the risk of landlords leaving the market.

In an open letter to the Ministry of Housing, Communities and Local Government, the TLIC says the move will lead to rent increases and a shortage of homes.

The letter has been supported by 17 letting agents including Belvoir, Hamptons, Savills, Knight Frank and Countrywide.

‘Landlords may sell up’

“The SDLT holiday introduced this year has already resulted in landlords deciding to sell their properties, the letter warns. “With no information on how or when owner-occupiers will need to comply with these energy efficiency requirements, more landlords may decide to sell to avoid the pressure of having to spend additional money on their properties. This could lead to a rise in homelessness if tenants are not able to purchase a property themselves.”

The letter adds: “If the maximum investment cap for energy efficiency works is increased to £10,000 this, along with additional competition due to less stock, will inevitably lead to rent increases.

“The consultation states that any money that a landlord spends on energy efficiency refurbishment works prior to 2023 will not be counted towards the cap. This means if the works are going to cost more than £5,000 and they are carried out before 2023 then landlords will find themselves having to spend more money than the cap states.”

Alternative plan

The TLIC has put forward an alternative plan to improve energy efficiency which it says would allow more time for landlords to recover from the financial effects of Covid-19 before investing more cash.

The TLIC’s suggested timescale would be:

  • By April 2026: all new and renewed tenancies to have a minimum D rating – the average rating for all homes.
  • By April 2028: all existing tenancies to have a minimum D rating and all new and renewed tenancies to have a minimum C rating
  • By 01 January 2030: all existing tenancies to have a minimum C rating.
  • Bring the start date forward for the refurbishment works cap from 2023 to 2020.

“We believe our proposal will reduce the pressure on stock available in the PRS market whilst still achieving the overarching goal of all properties in the PRS (unless exempt) achieving an Energy Performance Certificate rating of a C by 2030,” the letter concludes.

April 6, 2021

One comment

  1. Why should we expect the Govt to start thinking any Housing policies through ? – they haven’t up until now !
    There is far too much DEMAND ( which is recognised, – just Not the cause of it is acknowledged – Immigration ) and the Shortages will never solve themselves, – Only continue to get worse.

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