You could almost hear cheers and groans in equal measure. The government has confirmed it’s going to “soften” several of its green policies. A range of changes were made, including pushing back a ban on the sale of new petrol and diesel cars, and a relaxation on the installation of new gas boilers.
But, there was one key announcement that made property investors really sit up and take notice – the scrapping of planned EPC changes.
This, as our CEO Paresh Raja argued, will create a furore that will likely last for some time. It’s a complex issue and these changes will benefit some, while hindering others.
“Many landlords will breathe a sigh of relief that there is no hard deadline for them to upgrade D-or-below related properties,” he said.
“Tenants may also benefit – rental prices might have risen in order to cover the costs of landlords upgrading their properties.
“However, many landlords will have already improved the energy efficiency of their properties at great expense, so today’s announcement may trigger some frustration.
“Moreover, the next general election could result in the winning party reintroducing new EPC rules anyway, so the decision brings further uncertainty into a property market that would benefit from greater stability.”
As it stands, some renters may be worried about living in properties which no longer have to be as energy efficient as possible. With winter coming, many will have their energy bills on their mind.
Still, we must look to long-term. As Mr. Raja continued: “The announcement will offer some relief to landlords in the short-term, but the long-term goal – as in every industry – must be to work together towards a more sustainable future.
“Ultimately, greater clarity around long-term reforms is required within the property sector at this time.”
Of course, this news was bound to generate impassioned, and emotionally charged responses across the property scene. To see where everyone stands, we thought we’d reach out.
“It has come as no surprise to me that the government has rowed back on this”
Sean Bowling, director and advisor at SBL Financial, was relatively unsurprised by the news. He argued that anyone who kept up with all the EPC updates and reports would have seen this coming.
“It has come as no surprise to me that the government has rowed back on this,” he said.
“The fact of the matter is so many properties that haven’t been built recently are D to F rated. For many of those F rated properties, it would not matter what you did, the best rating you could ever hope to get would be a D.”
As a reminder, the state was aiming for all properties to be C rated as a minimum. It would have cost many landlords a pretty penny to reach this minimum which, when coupled with other upkeep costs, may not have been worth it. We saw this have an impact in real time, as many landlords opted to sell up entirely in recent months.
Mr. Bowling continued: “I think there was a real concern that there would be a massive fallout at deadline day, or they would have to do so many exceptions. It would have been a nightmare and impossible to manage.
“Some people were facing bills of £15,000 or more on just one property. And when you take into account double glazing, boilers, wall insulation, roof insulation, it becomes clear that some houses built years ago just could not accommodate all this.”
Efforts made thus far though may not have been entirely wasted, however. Ultimately, as Mr. Bowling noted, any improvements made to the quality of an accommodation will ultimately benefit tenants. They’ll be living in higher quality homes, and be experiencing a much better quality of life as a result.
“Like many things in life, there is a real difference between what legislators want and what is real life achievable at the coal face!
“In many respects, I think this announcement will come as welcome relief to many landlords and tenants as a more manageable solution is found.
“We need to find a way to be more green where it is realistically obtainable, so that landlords do not end up doing a fire sale of certain stock, and tenants panic about losing their homes.”
Chris Sykes, technical director and senior mortgage broker at Private Finance, welcomed the news, explaining how it could lead to renewed optimism among investors.
“This is great news for landlords. It was a hot topic both amongst lenders, borrowers and agents when it came to buy to let properties moving forward, with the deadline for EPCs fast approaching this is good news for landlords,” he said.
“The EPC regulations were being seen by some as the final nail in the coffin for them as a landlord due to the costs involved with improving EPCs.
“Where they may have been tempted to sell, reducing the rental housing stock, this may keep them in the market a while longer which would be good news for tenants in this difficult rental environment.”
Of course, while we’re focusing on the property market, pulling back on our green plans have a much wider impact on our wider economy, and how the UK positions itself on the world stage. It’s here where more difficulties may arise.
“There is nothing more urgent than mitigating and adapting to the climate crisis right now”
Juliet Baboolal, partner at Seddons, warned there could be long-term ramifications on the horizon.
“Some ministers have described the rowing back on green policies as a ‘moment of shame’ and will undeniably cause major uncertainty and have negative consequences for the economy, job creation, environmental sustainability, and long-term competitiveness,” she said.
“The uncertainty is likely to result in investors investing less in finance green projects and gravitate towards opportunities in other sectors with more stable policies.
“The lending industry has been increasingly involved in financing green projects and offering green loans. Rolling back green policies may reduce the demand for green loans, potentially affecting the lending industry’s profitability and growth potential.
“Rolling back on green policies could impact the UK’s reputation and competitiveness in the global market, as it may be perceived as lagging behind in sustainable practices and technological advancements.”
Hannah Duncan, freelance writer and journalist, was dismayed by the announcement and what it means for our collective future.
“There is nothing more urgent than mitigating and adapting to the climate crisis right now,” she said.
“In just seven years, huge parts of London, Cardiff and Gloucester will be flooded, according to research from Climate Central.”
Ms. Duncan argued therefore, that we should be investing more – not less – into protecting our properties from imminent climate dangers. It remains to be seen if homeowners will feel motivated to do so without legislation enforcing change.
“A conservative government usually looks to conserve cultural values, institutions, and environments. But this party seem hell-bent on destroying them.” She added.
Evidently, there’s mixed thoughts on this news. It could lead to a more stable rental market, but may also dent confidence in our economy.
We will have to adapt as we go. Fortunately, that’s what we’re good at here at MFS. We responded to the market’s needs as EPC changes were announced, and we’ll do so again now they’ve been rowed back.
Regardless of what’s on the way, expected or not, we’ll be there for your clients with the flexible finance they require.