Tenants Reject EPC D Ratings

An increasing number of mostly younger renters in the private rental sector are opting to reject properties with an EPC rating of D or below

Recent industry research has shown that as the cost-of-living crisis hits home, an increasing number of renters in the private rental sector (PRS) are making a concerted effort to avoid energy inefficient properties.

The survey found that 58% of private renters would be less likely to look at a rental property, if they were aware that it had an EPC rating of D or below.

‘The Confronting the EPC’ white paper published by Shawbrook’s Bank, found that young private renters are the ones who are particularly engaged with energy efficiency. 72% of renters aged 18-34 have said they always check the EPC rating of a property before considering their rental options. This is compared to 52% of renters aged over 55 years old.

With Shell’s record annual profits reportedly at the highest in their 115 year history and BP having just reported annual profits that have more than doubled in 2022, this appears to be a clear indication that energy costs are not likely to come down any time soon. Which is why for many homeowners and tenants, the soaring cost of energy has meant that energy efficiency has become a far bigger priority in recent times. And this seems to be the case more so for the younger private renters – whether it’s related to costs or through concern about the environment – or both.

This detailed research surveyed over 1,000 private renters, and found quite a significant gap was evident in the understanding and knowledge surrounding energy efficiency ratings in general and what each level actually means.

The report highlighted that just 7% of respondents felt they ‘know a lot’ about EPCs, whilst 27% of tenants say they have heard of EPC requirements but ‘don’t know anything about them’. A further 27% had never heard of the Energy Performance Certificates, with over half (56%) of renters admitting that they are unaware of the rating for the current property they live in.

Previous research undertaken by Shawbrook showed that the current energy crisis had encouraged 26% of landlords to make energy efficiency upgrades to their properties, in a bid to help reduce rising energy bills for their tenants.

Managing Director of Real Estate at Shawbrook – Emma Cox, said: “With an unprecedented energy crisis, the energy efficiency rating of our homes has become increasingly important. However, the research also indicates that we, as an industry still have much to do in terms of educating those in the rental market on this issue. Interestingly young renters are paying closer attention to the energy efficiency of their properties. While we don’t know whether this is driven more by cost or an interest in sustainability, landlords should assume that it’s only going to increase in importance for tenants.

“Landlords are already making changes to their properties to support their tenants and bring their properties up to the standard that is likely to soon be expected. However, this can be a costly exercise, particularly with the increasing costs of materials and labour.”

As part of the Government’s pledge to tackle climate change and to cut carbon emissions to zero by 2050, landlords will be required to carry out the required improvement works across all current and future properties. This is to ensure that their property portfolios achieve an Energy Efficiency rating of ‘C’ or above - by 2025 for all newly rented properties and 2028 for all rental properties.

At David Andrew, we let and manage an expanding portfolio of energy efficient properties in North London that have an EPC rating of B or C. Kasim Genc, David Andrew Area Manager says “ We have started to work with our landlords closely to improve the standards of all the properties we rent, especially those below a C rating, to meet the Government criteria coming into force over the next few years. We have found that for a growing number of tenants, the EPC rating has become of greater importance and for some, is a deciding factor in the property they choose to rent.

“At present, we manage an increasing number of modern energy efficient properties that are based in new developments, and these tend to have a C rating or above. This includes Rosetti Court, 407 Archway Road, London, N6 4EY (opposite Highgate Tube Station) which is generally a B rating and above, City North Development, 3 City North Place, N4 3FQ (above Finsbury Park Station) again which tend to have a B/C rating. Another example in Archway N19 is the Kinver House Development, which is rated B or C. These properties are popular with tenants who take a keen interest in sustainability and are mindful of keeping their energy costs down.

“With this in mind, we would advise all our landlords to allow sufficient time to make the required Government works necessary to improve their property energy efficiency ratings to ‘C’ or above - by 2025 for newly rented properties and 2028 for all rental properties. During the current cost of living crisis, properties that are energy efficient are proving particularly popular for a growing number of tenants in this current market.”

If you’re interested in letting your property, please call your local David Andrew Lettings Manager for a FREE market appraisal. Or get in touch if you would like more information and advice about EPC ratings. Contact:- Archway: 020-7619-3750, Highbury: 020-7354-9111, Stroud Green: 020-7281-2000 or email info@davidandrew.co.uk