With all the financial changes that have been hitting Landlords over the past couple of years, harsher tax policies, increase in regulations and higher cost increases, all hitting the rental market, the new energy drive has come into effect on the 1st April.
The idea itself is sensible, it’s great to make homes greener and more energy efficient. However at this time in conjunction with all the other costs, hitting Landlords at this time, it’s just one more dent in the Landlords pockets.
Although the impact of the new minimum Energy Performance Rating won’t affect all Landlords, those that are affected will have to prepare for another big cost.
Effectively, any property with an Energy Performance Certificate (EPC) rating of F or G, will have to be refurbished to bring the property/ies to a minimum rating of E.
There is light at the end of the tunnel.. (well perhaps a candle flicker..), If the cost to improve the property will be more than £3,500 including vat, these properties will be granted a “Zero Cost” exemption. But if the cost is below this figure, the work will have to be carried out now.
However, that light will be put out by April 2020, as, based on the Minimum Energy Efficiency Standards legislation for England and Wales, all properties, including the zero cost exempt properties that require an EPC, will have to be brought up to the minimum standard of E Rating, irrespective of the potential cost to the Landlord.
Who would want to be a Landlord !
The prospect of big bills for the work required to bring properties up to spec, in addition to all the other negative financial impacts hitting Landlords, is creating a major dent in the rental yields. In particular to the Landlords in London and the South East where yields are much lower than the rest of the country.
In some circumstances this could lead to the margins be cut so much that some Landlords, will have to deal with all the responsibilities associated with being a Landlord, but with little, and in some cases, even no profit.
Of course there are many in the buy-to-let market that have invested wisely, perhaps they don’t have any mortgages, so the removal of all tax relief will not have a major impact on their figures and they will be able to maintain their portfolios in the medium term. But who knows what the future may bring..
But for those that feel that managing properties and tenants and all the new rules and regulations that are now required, is proving to be more hassle than it is worth and are looking for their exit strategies.
Begs the question, if the number of private Landlords diminishes and the number of HMO Landlords have to evict tenants in order to sell their properties, (because they are no longer a viable investment) and the government fails to deliver on their housing strategy targets. Where are the homeless tenants go?
