introduction
As new Energy Performance Certificate (EPC) regulations take effect in the UK, investors from the UAE looking to invest in UK real estate may need to pay close attention. The UK government now requires rental properties to have an EPC rating of C or higher by 2030, a change that has caused concern among many landlords, who are calling for government support to meet these requirements.
Investment opportunities
Recent research from Shawbrook reveals that 29% of UK landlords believe that achieving the new EPC targets will only be possible with government assistance. For UAE investors, this is crucial information, as the cost of upgrading properties to meet these standards is a key issue. With rising material and labour expenses, 16% of landlords in the UK say they would struggle to afford the necessary improvements, and 25% are considering selling off properties that would need significant upgrades.
Some Landlords Are Already Making Energy Efficiency Upgrades
Despite the challenges, some landlords have already started investing in upgrades to boost their EPC ratings. In fact, 21% of landlords in the UK have made improvements to achieve a C rating, even before the previous UK government scrapped the EPC targets last year. Additionally, 22% of property owners have completed the required upgrades, with their properties now rated C or above. For UAE investors looking for energy-efficient, compliant properties, this could offer peace of mind.
Professional Portfolio Landlords Leading the Way
Professional portfolio landlords, particularly those with four or more properties, have been quicker to adapt to the EPC changes. According to Shawbrook’s research, a quarter of these landlords had already upgraded their properties before the previous targets were scrapped, compared to just 17% of smaller-scale landlords. For UAE investors eyeing large-scale UK real estate investments, these portfolio properties may represent a safer bet, given the head start on energy efficiency improvements.
Uncertainty Over EPC Targets Delayed Some Investments
The original 2030 deadline for EPC upgrades was never confirmed, creating uncertainty for many landlords. Some held off or delayed investments as a result. Now, with the deadline back in place, landlords are racing to catch up and ensure compliance with the new energy efficiency standards.
Rising Energy Costs and Tenant Demand for Energy Efficiency
As energy costs in the UK continue to rise, tenant demand for energy-efficient properties is increasing. For UAE investors, this presents a significant opportunity to invest in properties that not only meet new regulations but also align with tenant preferences. However, the costs of upgrading properties have also increased over the past two years, meaning that investors may need to factor in higher renovation costs for older UK properties.
The Scale of the Challenge: Older Properties in the UK
The UK has one of the oldest housing stocks in Europe, with many properties built before 1950. As a result, around 12% of private rental properties are currently rated between E and G on the EPC scale, well below the new C rating requirement. For UAE investors, it’s important to understand that the cost of upgrading these older properties can be significant, especially in regions outside of London, where property values are lower, but upgrade costs are consistent nationwide.
conclusion
With just over five years to meet the new EPC requirements, UAE investors looking to enter the UK real estate market should be mindful of these regulatory changes. Emma Cox, Managing Director of Real Estate at Shawbrook, notes, “Landlords are motivated to improve their properties, but the scale of the task is significant. Government and industry support will be critical in ensuring a sustainable and energy-efficient rental market in the UK.”If you’re a UAE investor considering UK real estate opportunities, now is the time to take action. Visit our website to learn how we can guide you through the EPC regulations and help you make informed investment decisions.
