The Intermediary – July 2025 - Flipbook - Page 40
BUY-TO-LET
Opinion
The success
of buy-to-let is
important to us all
T
he private rented sector
(PRS) in the UK is
facing one of its biggest
shis in decades. With
the Government’s net
zero ambitions driving
plans to overhaul Energy Performance
Certificate (EPC) standards, landlords,
brokers and lenders are all bracing for
change. Yet there’s a noticeable feeling
in the market that everyone is still
holding their breath.
At present, we’re in a holding
paern. The Government’s revised
EPC framework rules, the Home
Energy Model, aren’t due until next
year. Yet landlords expecting to
commence new tenancy agreements
are still expected to upgrade their
properties to meet higher standards
by 2028 – a deadline that feels
increasingly unrealistic considering
landlords may have less than two years
to improve more than 2.5 million
properties. Moreover, all private
landlords will have to get their rental
properties up to a Band C by 2030.
The Government estimates that
landlords will have to pay between
£6,100 and £6,800 to comply. Those
actually operating in the market
believe a significant proportion are
facing costs in excess of £10,000.
Further challenges exist – a big
contingent of the UK’s PRS stock
is leasehold, creating the kind of
bureaucracy that is in most cases
insurmountable when it comes to
agreeing what upgrades can be carried
out. Heat pumps, double and triple
glazing, cavity wall insulation and
connecting to heat networks are
simply unworkable for a sizeable
chunk of rented homes.
That’s not to mention the serious
practical issues. How do landlords
plan upgrades when the goalposts
aren’t yet defined? Where are the
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The Intermediary | July 2025
qualified assessors and tradespeople to
carry out works in such a compressed
timeframe coming from now?
Even with the Government’s
recently announced skills investment
into the construction workforce,
it will be years before they make
an appearance at the scale needed.
According to Kingfisher – which owns
B&Q, Screwfix and Tradepoint – the
UK could face a shortfall of 250,000
qualified tradespeople by 2030.
Government targets mean workforce
capacity is already overwhelmingly
focused on new-build.
Opportunity from chaos
The industry and landlords
themselves have been vocal about
their concerns – particularly as failure
to comply with the new rules will
mean landlords receive a £30,000
fine per property. It has even made
its way into Parliament, with Greg
Smith, Conservative MP for Mid
Buckinghamshire, raising the issue in
the House of Commons in March.
He has seen a number of individual
private landlords with just one or two
properties coming to surgeries to say
they will “simply sell up and remove
those properties from the private
rented sector because they cannot
afford to bring properties up to EPC C.”
He is far from alone.
Record numbers are selling off,
homes according to latest research by
the National Residential Landlords
Association (NRLA). Figures from Q4
2024 showed one in four landlords had
sold off at least some of their rental
homes last year, with the number
investing in new properties at just 8%.
Alongside this, demand from
tenants continues to grow, with
Zoopla revealing the number of
enquiries about every home to rent
this year is now 31% higher than pre-
ROB MCCOY
is senior product and
business manager at TMA
pandemic levels. It is pushing rents up
and up – something which comes with
a host of its own problems.
Regardless, amid the complexity
and uncertainty we are actually
seeing a number of opportunities for
brokers emerge. As ever, it comes
down to transactions. Rather than
spend valuable time and money with
older properties or those unsuitable
for retrofit, many landlords are
looking to purchase properties that
are already rated EPC A to C, or
which can be upgraded without a
disproportionate spend.
Landlords selling also adds to
the stock available for purchase by
first-time buyers and homemovers.
This creates momentum across
the entire property market, with
transactions looking healthier as this
year progresses. Bank of England data
backs this up, with Q1 figures showing
the value of gross mortgage advances
increased by 12.8% from the previous
quarter, to £77.6bn – the highest new
advances since 2022 Q4, and 50.4%
higher than a year earlier. The value
of new mortgage commitments
decreased by 1.5% from the previous
quarter to £68.2bn, but remained
13.5% higher than a year earlier.
Remortgaging also represents
an opportunity for brokers – many
landlords with larger portfolios are
looking to rebalance loan-to-values
across their book. Advisers are
invaluable at this juncture.
With rental stock a pivotal piece
of the housing tenure mix in this
country, it is imperative we do not lose
sight of the value the landlord market
adds to our housing mix. ●
