F and G rated rentals: what landlords can do, and why many sell

Since 1 April 2020, privately rented homes in England and Wales covered by the rules must have an energy rating of E or above, for new and existing tenancies alike. A landlord with an F or G rated home has three options: upgrade it, register a valid exemption, or stop letting it.

Exemptions

• The cost cap: if improvements up to £3,500 (including VAT) can't lift the home to E, the landlord can register an exemption after making the improvements that fit within the cap.
• Other exemptions cover cases such as recommended work that would reduce the property's value, or where consent from a third party is refused.
• Exemptions must be registered on the government's PRS Exemptions Register and usually last five years.

Penalties

Councils can fine landlords who let a non-compliant home without a valid exemption, with penalties of up to £5,000 per property depending on the breach.

What's coming

The government has proposed raising the minimum standard for private rentals to C by 2030. Check the current position before relying on any date, but many landlords with low-rated homes are already weighing up whether to upgrade or sell.

Why these homes suit sourcers

• The landlord has a clear, time-bound problem.
• Upgrade bills of £10,000 to £30,000 are common, which many small landlords don't want to pay.
• Some lenders won't lend on F and G rated homes, so cash buyers have less competition.
• Investors who can do the work can add value, and the energy certificate lists the recommended improvements and their estimated cost.

Upstream flags every rented home rated F or G in its areas, with the estimated upgrade cost and how long the landlord has owned it. Use the postcode checker to see how many there are near you.