Landlords are facing a £17.9bn EPC improvement bill.

Landlords in England and Wales could be facing a bill of £17.9 billion to ensure that their rental properties meet a minimum energy performance certificate (EPC) rating of C by 2025.

While the government has yet to confirm the 2025 deadline for tenancies, or the 2028 deadline for all tenancies, the prospect of having to shell out up to £10,000 on a rental property is leading to many landlords to quit the sector.

And now, real estate firm Knight Frank has worked out the total bill for upgrading properties to meet a C rating and it is £17.9 billion.

30% of tenants say they are willing to pay a premium.

The firm also says that around 30% of tenants say they are willing to pay a premium for renting a low carbon property.

However, Knight Frank also highlights that the average annual rent being paid in 40% of local authority areas would not meet the average landlord’s bill of £9,260 to improve the property to an EPC C rating.

The legislation for improving energy efficiency standards is still at the consultation stage but should the government decide on the 2025 deadline for new tenancies to meet the EPC rating, then the firm warns that the private rented sector (PRS) will face a range of issues in meeting the deadline.

That’s because it has calculated that around 60% of the 4.8 million households in the PRS have an EPC rating of C or D.

And there are 2.4% of homes with a rating of F or G, which is below the current legal minimum rating for rented homes.

Exempt from meeting the current EPC legislation.

However, some properties are exempt from meeting the current EPC legislation, including listed homes and those properties where the cheapest improvement bill would be more than £3,500.

Knight Frank also warns that the cap on a landlord’s bill could rise to £10,000 when the legislation is finally unveiled.

The firm says that it has looked at how much landlords will have to spend on boosting an EPC rating and found that the average cost to go from a D to a C is £5,500.

Landlords are facing a bill of more than £10,000.

When the property is in bands F and G, however, the real estate firm says that landlords are facing a bill of more than £10,000 to reach a band C rating.

The largest bills will be faced by landlords in London who are facing an outlay of £3.2 billion because around a fifth of PRS households are found in the capital.

Knight Frank warns that when the legislation is passed, landlords will struggle since they are already facing extra cost pressures which come on top of rising mortgage costs, the erosion of capital gains tax allowances and changes to mortgage interest relief.

That may lead to some landlords looking to leave the PRS entirely or rationalising their portfolio.

‘Most landlords are unaware of what's coming’.

Knight Frank's Flora Harley said: "Despite the potential impact, most landlords are unaware of what's coming.

"A survey conducted in summer 2022 found that 57% of landlords were either unaware or unsure about the proposed changes, according to the NRLA."

She added: "Whilst there is no exact clarity on what regulation will be coming for landlords, or indeed when, there seems to be only one direction and urgency for action.

"Not only was this highlighted by the IPCC in March, but the National Infrastructure Commission also recommended a tightening of standards in the private rental sector only serving to strengthen the likelihood and pace of implementation."

‘Lack of a confirmed deadline is causing confusion’.

Simon Thompson, the managing director of Accommodation for Students said: “The lack of a confirmed deadline is causing confusion in the PRS, and landlords need to keep abreast of any decision that is made because they will have no choice but to comply if they aren’t exempt.

“This also means that they will have to spend up to £10,000, which is what the Telegraph has predicted will happen, and for many that will mean not making a profit and for others, it will mean leaving the private rented sector.”

Half of tenants will leave if rents go up.

A new survey has revealed that 50% of tenants will move out of their rented home if the landlord increases the rent.

The findings from Uswitch also found that one in three tenants would be happy to renew their tenancy - but only if they have a positive relationship with their landlord.

Those most likely to renew their tenancy are aged over 55 with 44% happy to sign on the dotted line, and 68% of tenants say that communication is a key component for a landlord-tenant relationship.

When asked the same question, 51% of landlords said communication is key.

The findings also highlight that with rented home demand around 10% higher than it was in March 2022, tenants will face a dilemma on whether to move home in the hope of a cheaper rent or staying put with a higher rent.