Sale Tenants’ Spiralling Energy Bills are About to Become Sale Landlords’ Problem

As gas and electric bills rocket for Sale tenants, Sale landlords who do not start to make energy efficiency upgrades face lengthy void periods and will have to discount their rents. This is irrespective of the Government’s plans to change the rules on renting properties with low Energy Performance Certificate (EPC) ratings.

Until six months ago, out of the thousands of tenants I have shown around Sale properties in all my years as an agent, I can count the number of tenants who have requested to see the EPC of the rental property on the one hand. Now, it’s the first question tenants ask.

The better the EPC rating, the lower the gas and electric bills.

Sale tenants are leaving their poor EPC-rated properties which are too expensive to run and moving into higher-rated EPC rental properties.

The average heating bill for the 7,368 Sale tenants will rise from £86.10 per month to £223.86 per month.

And their hot water bill will rise by £34.15 per month and lighting by £21.58 per month.

Each Sale tenant will have to find an extra £193.49 per month for their gas and electric bills.

To give you an idea of the extent of the money being spent by Sale tenants on heating alone (ignoring hot water or lighting), last year it was £7,612,729.37, and by 2023, it will be  £19,793,096.37 a year.

Yet these stats don’t tell the whole story.

It is a legal requirement for every rented property to have an EPC which rates a property on its energy performance (like those washing machine or fridge ratings, albeit for a property). A is the best rating, and G is the worst.

Whilst the law states property cannot be rented with an EPC rating lower than an E in England and Wales, there are exceptions to this, meaning Sale rental properties are still being let legally with an F and G rating. Although legislation for a minimum E rating EPC requirement in Scotland was scheduled in 2020, it never passed through the Scottish Parliament because of the pandemic. 

Let me show you the average saving in energy bills between the EPC rating of an average Sale rental property.

  • A Sale rental property with a D rating will cost £38.50 more per month than a C-rated property
  • A Sale rental property with an E rating will cost £67.66 more per month than a D-rated property
  • A Sale rental property with an F rating will cost £97.16 more per month than an E-rated property

Both Westminster and Holyrood governments now propose introducing a minimum EPC of band C for all new tenancies from 2025 (and 2028 for existing tenancies).

Irrespective of this new potential legislation, those Sale landlords with low EPC ratings will now need to seriously consider making those energy efficiency upgrades to ensure their Sale rental properties continue to appeal to tenants.

I can see Sale rental property’s energy efficiency ratings filtering into rental prices over the winter months.

Sale rental properties with low EPC ratings will probably rent for between 4% to 10% less than higher energy proficient properties.

This means Sale landlords could have to accept between £48.00 and £120.00 per month less for an average Sale property with a low EPC rating compared to a high-rated EPC rental property.

Any Sale rental property with a lower EPC rating will also take longer to find a tenant, especially during the winter. This means some Sale landlords will have the prospect of void periods early next year.

I have seen more Sale rental properties coming onto the market in July and August, so if this trend continues, this will give Sale tenants much more choice. With the increased supply of rental properties, I certainly believe some tenants could decide to offer less on Sale rental properties with low EPC ratings.

So, what are the options?

I am experienced in reading EPC reports and am aware of the most cost-effective way to improve the EPC rating of your Sale rental property. Irrespective of whether you are a landlord client of my agency, another Sale lettings agency, or you even manage your property yourself – feel free to drop me a message. I will find your EPC on my database and give you 5/10 minutes of my time, over the phone, at no charge, to guide you on the best options. What do you have to lose?

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