Landlords facing £26bn ‘green tax’ to meet government’s energy targets

Landlords across England and Wales face a £26bn challenge to meet the government’s 2030 energy efficiency targets.

Fresh analysis from Just Landlords shows that 3.38 million properties currently fall short of the proposed minimum EPC rating of C, with upgrade costs in some areas exceeding nearly half of annual rental income.

Under the government’s Warm Homes Plan, all tenancies must reach Band C by 1 October 2030. While the average cost to bring a property into compliance is £7,633, costs vary widely—rural and northern regions face bills as high as £12,000.

Just Landlords has calculated a ‘repair-to-rent ratio’ to show how long it will take landlords to fund essential upgrades. In Powys, for example, where 83% of properties are non-compliant, the average retrofit bill of £10,759 is equivalent to 148% of the area’s average annual rent of £7,248.

Areas with Highest Repair-to-Rent Ratio

1. Powys – 148%
2. Hartlepool – 138%
3. Isle of Anglesey – 135%
4. Gwynedd – 131%
5. Northumberland – 129%

In a stark contrast, thanks to higher rental prices, landlords in London can cover retrofit costs with just a few weeks of their rental income.

Areas with Lowest Repair-to-Rent Ratio

1. Kensington and Chelsea – 20%
2. Westminster – 22%
3. Islington – 25%
4. Hammersmith and Fulham – 25%
5. Camden – 26%

This clear divide between regions continues when looking at current compliance levels, with the majority of the most compliant regions being found in major cities and urban areas.

Most Compliant Regions

1. Tower Hamlets – 66% compliant
2. West Northamptonshire – 55% compliant
3. Southwark – 53% compliant
4. Bracknell Forest – 51% compliant
5. Islington – 51% compliant

Meanwhile, in more rural and coastal areas, the vast majority of homes require immediate investment.

Least Compliant Regions

1. Isles of Scilly – 90% non-compliant
2. Ryedale – 88% non-compliant
3. Isle of Anglesey – 87% non-compliant
4. Burnley – 85% non-compliant
5. Pendle – 85% non-compliant

As well as reporting higher levels of non-compliance, many of these regions also represent the highest physical risk, with over half of properties currently having EPC ratings of E, F or G. These ‘deep retrofit’ areas require major structural interventions, such as solid wall insultation and heat pumps.

Deep Retrofit Regions

1. Isles of Scilly – 70%
2. Isle of Anglesey – 60%
3. Ryedale – 57%
4. Eden – 56%
5. Powys – 52%

Kimberley Kealing, managing director of Just Landlords, said: “While the drive towards more energy-efficient homes is a vital step towards Net Zero, it involves a massive financial burden for landlords. Shockingly, our data reveals that for many landlords, the cost of renovations could exceed their annual rental income by nearly 50%. Without significant support, this ‘green tax’ could leave landlords questioning the financial viability of their properties.”

“From an insurance perspective, this national renovation project carries its own risk. Major works can increase a property’s risk profile, with a higher chance of claims related to things like structural damage, escape of water and fire. Landlords in these ‘deep retrofit’ areas must ensure their coverage is tailored for the scale of works being undertaken.”

Read the orginal article: https://propertyindustryeye.com/landlords-facing-26bn-green-tax-to-meet-governments-energy-targets/?utm_source=rss&utm_medium=rss&utm_campaign=landlords-facing-26bn-green-tax-to-meet-governments-energy-targets