They have also resulted in the improvement of housing standards in recent years
Investments by landlords in the private rented sector have driven a 165% increase in the number of homes with an energy performance certificate (EPC) rating of ‘A’ to ‘C’ in the past decade, as part of a wider improvement of standards across the sector, Paragon Bank’s data analysis has found.
Government data revealed that 1.925 million rental properties in England have an EPC rating of ‘A’ to ‘C’, an increase of 1.2 million compared with 2011, with the private rented sector (PRS) boasting a higher proportion of homes in the bracket compared to owner-occupation.
Paragon said landlords have been investing in homes that benefit from increased energy efficiency in anticipation of proposed government legislation, as well as cheaper running costs typically associated with more energy efficient homes.
The lender’s new report, Raising the standards of privately rented property, highlights that 44.5% of PRS properties have an EPC rating of ‘A’ to ‘C’, compared with 42.9% in the owner-occupied sector.
Paragon reported a 44% increase in lending against ‘A’ to ‘C’-rated rental property in its last financial year to £832.2 million.
Under the government’s proposals, properties let under new tenancy agreements must be rated EPC ‘A’ to ‘C’ from 2025 and all tenancies from 2028.
If all properties were to be upgraded by the proposed date of April 1, 2025, approximately 3,130 homes would need to be upgraded to at least the EPC ‘C’ rating per day. That rises to 4,500 if only working days are included.
Meanwhile, the Paragon report also revealed that the proportion of PRS homes defined as non-decent, according to the government’s English Housing Survey, has declined from 44% in 2008 to 23% today.
The buy-to-let lender said the addition of good quality homes has diluted the presence of poorer stock. In 2008, 1.8 million privately rented homes were classed as decent, and this figure rose to 3.3 million in 2021 – an 83% increase. There has also been a reduction in the number of properties classed as non-decent – falling from 1.4 million to 990,000, a 29% reduction.
“The private rented sector is too often associated with poor quality housing and that is simply incorrect,” Richard Rowntree (pictured), managing director of mortgages at Paragon Bank, said in an article posted on the Paragon website. “Landlords have driven an improvement in standards in recent years, which is reflected in the increase in energy efficient rental property.
“However, landlords and the broader industry that serves the private rented sector now need more clarity on the government’s proposals for minimum levels of EPCs. It is over two years since the government’s consultation closed and the vacuum of information or direction since has created uncertainty and confusion.
“We believe the timescales as they are currently proposed are unworkable as the infrastructure to support the upgrading of over two million properties in such a short window does not exist.”
Rowntree added that the effort of landlords in providing quality homes to millions of tenants should be recognised and celebrated, and urged the government to support local authorities in weeding out poor quality property and landlords that “aren’t up to scratch.”
“Paragon supports the government’s aims set out in the Renters Reform Bill to raise the standard of property and to introduce a property portal to ensure information is available to all,” he stated. “A more transparent market will be to the benefit of tenants, landlords, and lenders.”
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