Upcoming Challenges Could See Many BTL Landlords Exiting the Sector

Recent years have been fairly unkind to the UK’s buy-to-let landlord community. With further tax hikes on the cards over the coming years, it is entirely likely that more BTL property owners than ever before will struggle to make meaningful profits.

Aside from this, there are those who see other issues on the horizon that could result in an exodus away from the sector. Specifically, the adoption of mandatory energy performance improvement measures is likely to represent a significant challenge for landlords and investors across the country.

Current figures from the Office for National Statistics (ONS) indicate that most private rental homes across the country have a better-than-expected median energy efficiency score. However, this average score is still significantly lower than the wider average for the housing sector in the UK.

In England, the average rented detached property has an energy efficiency score of 58. This increases to a score of 60 for semi-detached rental properties, 62 for terraced homes, and 68 for maisonettes.

Average scores are similar in Wales, coming out at 56, 61, 61, and 68, respectively.

Except for flats and maisonettes, all the scores are significantly lower than the general national averages. Data from the ONS suggests that the average home energy efficiency score in England is 66, and in Wales it is 64.

The main issue facing landlords is the government’s goal of ensuring as many homes as possible have an energy efficiency score of at least 69 by 2035. Something that is likely to prove difficult or impossible for many landlords who own housing stock in need of significant improvements to hit this target.

Speaking on behalf of Propertymark, policy manager Timothy Douglas emphasised the challenges on the horizon for many UK landlords.

“It is now well over twelve months since all properties rented on a relevant tenancy in the private rented sector in England and Wales must meet the EPC band E rating, so it is good to see agents and landlords meeting the requirements and adhering to the rules; everyone wants to see a rented property that is safe, secure, and warm,” he said.

“However, the government’s latest proposals for EPC band C present a much tougher challenge for many properties across the country.”

“With the wide range of property types in the private rented sector and proposals for a £10,000 cost cap, landlords across the country are being presented with financial and practical challenges, which, if not tackled, could result in a reduction in supply and landlords exiting the market.”

Whether the issue results in a mass exodus from the sector remains to be seen, but it will inevitably mean major costs being incurred by many landlords across the country.