Bank survey highlights energy efficiency challenges for UK landlords

Bank survey highlights energy efficiency challenges for UK landlords

A recent Barclays Bank survey reveals significant concerns among UK landlords and renters about energy efficiency upgrades, with many landlords anticipating difficulties in meeting new Minimum Energy Efficiency Standards.

Barclays Bank’s latest survey shows that over half of UK adults (56%) now consider energy efficient upgrades essential due to rising utility costs. Among renters, this sentiment is even stronger, with 63% viewing such improvements as necessary. Despite this, renters report limited ability to undertake significant upgrades themselves, with 29% having taken no energy efficiency action in the past year compared to 23% of homeowners.

The survey, which included a majority of Barclays customers who are landlords, found that 51% have made enhancements to improve their properties’ Energy Performance Certificate (EPC) ratings within the last three years. However, 38% of these landlords expect challenges in complying with forthcoming changes to the Minimum Energy Efficiency Standards (MEES). The average estimated cost to bring a property up to the new standards is around £9,000.

Barriers to energy efficiency improvements identified

Barclays outlined several obstacles hindering energy efficiency progress across all housing tenures. These include the financial burden of upgrades, uncertainty over regulatory requirements, and practical difficulties in implementing improvements, especially in rented properties where tenants have limited control.

For landlords, the cost and complexity of meeting new MEES regulations are significant concerns. The estimated £9,000 per property figure highlights the financial impact on small portfolio landlords who may already be facing tight margins. Additionally, the survey indicates that a sizeable minority of landlords foresee difficulties in navigating the evolving regulatory landscape.

The bank has called on the government to prioritise four key areas to support the sector in overcoming these challenges, though the survey does not specify what these priorities are. This call reflects the ongoing debate about how best to balance the drive for greener housing with the practical realities faced by landlords and tenants.

Context of evolving energy efficiency regulations

The UK government has been progressively tightening energy efficiency requirements for rental properties. The MEES regulations currently require private rented homes to meet a minimum EPC rating of E, with plans to raise this threshold to C by 2030. These changes aim to reduce carbon emissions and lower energy costs for tenants.

However, the pace and cost of compliance have caused concern among landlords, particularly those with older or harder-to-upgrade properties. The potential for increased void periods, higher upfront investment, and complexity in managing improvements has led some landlords to consider exiting the market rather than upgrading.

Renters’ inability to effect changes themselves further complicates matters. Since tenants cannot usually make structural or insulation improvements, landlords bear the responsibility for compliance, even though tenants are the primary beneficiaries of lower energy bills and improved comfort.

Practical implications for landlords and letting agents

Landlords should assess their portfolios to identify properties requiring energy efficiency upgrades to meet upcoming MEES requirements. The average cost estimate of £9,000 per property suggests budgeting for substantial expenditure, particularly for smaller landlords with limited capital reserves.

Letting agents may need to advise landlords on compliance strategies and help communicate the benefits and requirements to tenants. Agents should also monitor regulatory updates closely, as government priorities and support schemes could evolve in response to sector feedback.

Given the barriers highlighted, landlords might consider phased upgrades or prioritising properties with the poorest EPC ratings. Exploring available grants, financing options, or energy efficiency schemes could mitigate some costs. Maintaining clear records of improvements and compliance efforts will be essential for regulatory inspections and potential enforcement.

Uncertainties and areas to watch

The survey indicates uncertainty around how landlords will meet the stricter MEES standards and what government support will be available. The call by Barclays for government focus on four priorities suggests that current measures may be insufficient or unclear.

Landlords should watch for announcements on funding, technical guidance, and enforcement timelines. The potential for regulatory changes or delays remains, especially if widespread compliance difficulties emerge. How local authorities enforce MEES and whether exemptions or phased approaches are introduced will also be critical.

The balance between protecting tenants from high energy costs and ensuring landlords can afford compliance remains delicate. The sector awaits clearer government direction on practical support and enforcement policies.

Considerations for landlords now

• Review the EPC ratings of all rental properties and identify those below the expected future minimum standard.
• Estimate upgrade costs and explore financing or grant options to support improvements.
• Keep detailed records of any energy efficiency works undertaken or planned to demonstrate compliance efforts.
• Stay informed on government consultations and policy updates regarding MEES and energy efficiency regulations.
• Communicate with tenants about planned upgrades and potential impacts on rent or tenancy terms.
• Consult letting agents for advice on managing compliance and tenant relations during upgrade works.

Supporting landlords with energy efficiency compliance

TLA membership offers landlords and letting agents access to practical compliance resources and up-to-date regulatory information relevant to energy efficiency standards. Through TLA’s developing property management platform, ORBIT, currently in BETA testing, members can organise property records, track energy efficiency documentation, and record key compliance actions. ORBIT’s tools aim to assist landlords in managing the complexities of MEES obligations by centralising evidence of improvements and communications.

Exploring TLA membership can provide landlords with guidance on navigating energy efficiency requirements and help maintain organised records ahead of inspections or enforcement. Access to tailored compliance support and documentation templates can reduce the administrative burden associated with upgrading rental properties.

Learn more about ORBIT BETA access and review TLA’s landlord membership options to support your portfolio’s energy efficiency compliance.

Landlords should prepare now for the financial and administrative demands of meeting new energy efficiency standards, while monitoring government announcements for further clarity and support.

Sources: Landlord Today