Private landlords in England and Wales could end up forking out thousands of pounds in order to get their properties compliant with new government energy efficiency rules.

Under the government’s Plan for Change initiative all private rental properties will have to meet minimum energy standards by 2030. Government analysts say the costs to upgrade to a new Energy Performance Certificate (EPC) level ‘C’ will cost landlords anything from £6,100 to £6,800.

The proposal is currently out to consultation, with landlords and renters urged to make their feelings known.

A spokesman for the Department for Energy Security and Net Zero said the move could benefit renters by cutting back their fuel bills to the tune of £240 a year.

Landlords to look at solar panels and cavity wall insulation

In order to remain complaint with the proposed legislation landlords will have to invest in double glazing, cavity wall insulation and other measures to ensure tenants remain warm in their homes. Solar panels and smart meters may also be considered.

Deputy Prime Minister and Housing Secretary Angela Rayner said: “Through our Plan for Change we are driving up housing standards, improving quality of life, and slashing energy bills for working people and families.

Ed Miliband, Energy Secretary, added: “These plans will also make sure that all private landlords are investing in their properties, building on the good work of many to upgrade their homes to Energy Performance Certificate C or higher already.” 

Nearly half of landlords already compliant 

The good news is that around 48% of private rental homes are already compliant with the new proposed government standards. The current EPC standard for private rental properties is ‘E.’

One of the proposals in the consultation is whether to give landlords an additional two years after the 2030 cut-off to get up to standard. Another is to limit the cap for landlords to a cost of £15,000 per property, while a third is to introduce an affordability exemption, limiting the cap to £10,000, for a property with a lower rent or a reduced council tax band.

House prices fell for the first time in nine months. The fall of 0.2% was on a monthly basis, and between November and December last year.

That’s according to the latest housing data from the Halifax which showed the cost of the average property sat at £297,166 in December. However, despite the fall, property is still 3.3% higher than the same period last year.

Northern Ireland saw the biggest annual increase in house prices, at 7.4%. Next was the North West with 5.3% and the North East at 4.6%. The lowest annual increase in the average property value – 0.2% – was in Scotland.

Halifax and Nationwide collide over data 

The Halifax results are in sharp contrast to Nationwide’s data. The latter reported that property had, in fact, gone up by 0.7% between November and December. Halifax sample 3,000 more data points than Nationwide and these are larger in northern parts of England, accounting for some of the discrepancy.

Amanda Bryden, head of mortgages at Halifax, attributed the higher figure in November and earlier in the year to increased demand. This, she said, had been triggered by the lowering of mortgage interest rates together with an increase in wages and the lowering of price inflation.

“Providing employment conditions don’t deteriorate markedly…buyer demand should hold up relatively well and, taking all this into account, we’re continuing to anticipate modest house price growth this year,” she added.

Developers noted increased demand after rates cut

York-based house developers Persimmon confirmed it had seen an increase in buyer demand when mortgage interest rates had first fallen in summer last year. Its total sales for 2024 was around 15,500 properties. This was almost 600 more properties than the previous year.

The Bank of England is expected to reduce its base rate further this year, prompting mortgage lenders to reduce interest rates. Certain lenders, such as HSBC, Halifax and the Leeds Building Society have already reduced mortgage interest rates this month in anticipation of future Bank of England rate cuts.

Other factors expected to affect the market in 2025 is the ceasing of the current Stamp Duty relief options at the end of March.

Property prices are set to rise by 2.5% in 2025. 

That’s according to online property portal Zoopla. Their latest Housing report also predicted a 5% increase in the number of homes swapping hands in 2025. That equates to around 1.1 million properties – 10% more homes than were sold in 2023.

Property prices rose by 1.5% from October 2023 to the same period in 2024. The portal now assesses the average property in the UK at £263,300 – a jump of £3,900.

Changing demographic introducing more homes to market

The stamp duty changes in April next year, together with higher household income and reduced mortgage rates are believed to have stimulated the market in recent weeks. But an ageing population looking to downsize and the continuation of hybrid working is also making its mark, by introducing more second homes. Landlords have also been selling off rental properties at a greater rate than before thanks to various fiscal changes, including increased tax on second homes.

Zoopla’s exec direction Richard Donnell said areas benefitting from the rise in prices were more likely to be Scotland, Wales, the North and the Midlands. Southern England and London would prove too costly for many people, especially first-time buyers.

Areas which benefitted most from buyer demand

The Zoopla report also identified those areas where house prices had risen most over the past year. The North West and North East of England were top of the list, with property price rises of 2.9% and 2.6% respectively. Scotland was next with a jump of 2.3% in house prices (in Wales property increased 2.1%). Both the West Midlands and Yorkshire and the Humber saw a 2.1% rise in prices.

In London property valuations rose by 1.1%. The figure for the South West was 0.4%, which both the South East of England and East of England saw a minimal 0.3% rise in prices.

Increase in mortgage approvals

As expected, due to increased activity in the property market, more mortgages were approved last month – the largest amount for more than two years. The Bank of England signed of 68,303 in October. That’s a 3.3% increase on the previous month and the fifth consecutive month of growth.

There are more prospective house buyers in the UK right now than there has been in the last two years.

That’s the findings from the latest Propertymark report. The estate agents’ membership body says the number of buyers per branch totals 96 individuals, couples or families.

It also found that property sales were around 10% higher this summer than the same period in 2023. Other findings from the report include a £5,618 rise in the value of property in England over the past 12 months. The number of mortgages granted is also on the rise.

Another report, this time by the government’s Office of National Statistics showed the value of the average UK property in September this year was £292,000. That’s a yearly increase of 2.9%. 

All property types increased in value

All types of property had increased in value over the past 12 months. Detached were sitting at an average cost of £470,000. The average semi-detached was £298,000 (with a jump 3.4% over the past year, that proved the biggest increase). The average terraced property came in at around £257,000, while a flat or maisonette was typically worth around £254,000.     

The average cost of property for a first-time buyer in September was £259,000 – although that’s an increase of 2.9% over the past year, it’s a drop of 0.2% from August. The typical cost of a New Build property in July this year was £250,000 – that’s a whopping 22.8% higher on the previous year’s price.

Analysts point to reversal of the Stamp Duty discounts in April spurring potential buyers on now. They also attribute the higher figures to a fall in mortgage interest rates this year. Some lenders are even suggesting there may be another Bank of England base rate cut when the figure comes up for scrutiny again in December.

Nathan Emerson, Propertymark CEO says she is confident of the increased activity in the market continuing.

“With more appetite from buyers comes more homes coming onto the market, so we expect to see activity accelerate over the coming months moving into 2025,” she said.

The latest Royal Institution of Chartered Surveyors (RICS) survey, published this week, backs up the notion of a strengthening property market. 

Buyer demand is up for the fourth month in a row, with an increased 12% of surveyors reported an increase in new enquiries over the past month. An additional 16% of surveyors reported a growth in house prices. Only two regions saw a drop in prices – Yorkshire and the Humber, with a fall of 23%, while 4% of surveyors in the South West also reported a fall in property values.

Surveyors in both Scotland and Northern Ireland expect to see strong growth in the coming months, especially in the run up to the Stamp Duty deadlines in April when rates will revert to their previous cut-off points. 

Rental market chasm grows

The situation isn’t quite as healthy in the rental market however, where tenant demand still significantly outstrips supply. Around 29% of surveyors reported a drop in new landlord instructions and, at the same time, 19% said they’d seen a rise in tenant demand over the last few months. The result being that one third of surveyors expect rents to rise in the first quarter of 2025.

RICS president Tina Paillet said their data showed renters were feeling the pressure. And it didn’t look like easing any time soon.

“The Autumn Budget’s immediate stamp duty increases for landlords acquiring rental properties may increase opportunities in supply for owner-occupiers, but it will make it more challenging to address the critical shortage of rental homes,” she said.

Landlords continue to sell off properties

This is backed up by a survey published today which shows around 40% of landlords plan to sell rental properties over the next 12 months. The survey, by Pegasus Insight, and commissioned by the National Residential Landlords Association, also showed that 19% had already sold off some of their rental properties over the past year. This contrasted with 8% who had bought properties over the same time frame.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “Tenants the length and breadth of the country know that there are not enough homes to rent.”

He added: “Whilst landlords selling up might benefit a minority of tenants in a position to afford a home of their own, the vast majority will face a growing struggle to access rental homes.”