Paragon Bank calls for the phased introduction of minimum energy standards for private rental properties to limit disruptions to the leasing sector that is already under tremendous pressure.
Paragon urged the government to abandon its 2030 target to lease the property’s minimum energy performance certificate to adopt a phased approach, which includes: new leases in 2030; extended leases in 2033, all leases in 2035.
This is contrary to the proposals made by the Department of Energy Security and the net zero implementation date, with the new rentals being implemented in 2028 and the net rentals for all leases being 2030.
Paragon insists that this timeline is too short and could cause landlords to leave the industry, transfer the issue of upgrading property to EPC C to other terms and affect tenants by reducing the number of available rental homes.
Buy experts also believe that the ability to transform supply chains and labor is insufficient, especially the government’s competitive target for building 1.5 million new homes over the next four years.
According to the UK government’s own data, currently around 60% of properties in the private rental sector in England and Wales are under EPC D or below, and 1.6 million properties need to be upgraded each year to meet the 2030 target.
Paragon notes that this is equivalent to making about 2,000 properties remodeled in PRS every day to meet the 2030 deadline, or 4,000 times hit the 2028 deadline.
A recent survey of nearly 900 landlords by Paragon found that only 17% believe 2030 is a reasonable deadline to complete EPC work. Additionally, nearly three-quarters (73%) of landlords reported that tenant demand remained strong, while Zoopla’s latest rental report found tenant demand 79% higher than pre-pandemic levels, while demand for available stocks was 22% lower.
“We support the government’s net-zero goals and understand the need to strengthen policies and regulation to drive climate action, but we strongly urge a long-term and more balanced approach to allow reverse supply chain growth,” said Louisa Sedgwick, Director of the Mortgage Bureau of Paragon Bank.
“Increasing delivery schedules and maintaining flexible exemptions can make EPC AC in PRS smoother without exacerbating demand and supply imbalances, which are already expected to grow due to forecast population growth and demographic changes,” she added.
In addition, Paragon outlined further measures in its consultation submission to support landlords in transitioning PRS to a minimum EPCC.
This includes a maximum investment cap of £10,000 and a seven-year exemption to restore the original proposal.
A range of financial measures, such as a “greenhouse grant”, are introduced to incentivize landlords to invest in their properties.
Ensure EPC reforms are aligned with energy performance of the building system
Implement complementary skills and training programs to address skills shortages in the transformation and construction industry
Considering regional differences in energy-saving performance, the northern and central regions have a larger proportion of EPC C compared to the southern region. This may lead to increased costs and disruptions in these areas
Sedgwick concluded: “Hurried legislation could severely undermine the PRS, and the PR has adapted to the correct bills for new tenants, forcing some landlords to sell because they are unable to get the job done in time.
“Adopting a more realistic and realistic time frame will give landlords more capacity to adapt to their property, allowing for the transformation of supply chains and labor to grow, ultimately more beneficial to tenants.”
