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Published: 11 January 2025

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Leading lettings expert and Past President of ARLA Propertymark, Maxine Fothergill outlines the changes and offers advice on how to prepare – and to have your say!

The Government’s recent consultation on Energy Performance Certificates (EPCs) proposes significant reforms to reshape how energy efficiency is assessed across the UK housing market. While these changes aim to align with net zero goals by 2050, they also raise concerns about cost, practicality, and their potential impact on the property sector.

Let’s explore what’s being proposed and how it could affect homeowners, landlords, and tenants.

Why are changes being proposed?

EPCs were introduced in 2008 as part of efforts to decarbonise the UK’s housing stock, which accounts for around 20% of national greenhouse gas emissions. The certificates assess a property’s energy efficiency and recommend improvements, with landlords and sellers required to provide one when marketing a property.

However, the current system has faced criticism for being outdated and inconsistent. For example, properties with heat pumps—a low-carbon heating solution—may receive lower ratings due to electricity costs, despite being more environmentally friendly. The proposed changes aim to modernise EPCs, making them more accurate and useful for property owners and tenants.

Key proposed changes

1. Introduction of New Metrics

The government plans to replace the current two headline metrics—the Energy Efficiency Rating (EER) and Energy Impact Rating (EIR)—with a broader set of measures. These include:

• Energy Cost: Predicts running costs for energy use.
• Fabric Performance: Assesses insulation and thermal efficiency (walls, roof, and windows).
• Heating System: Rates the efficiency and environmental impact of the heating system.
• Smart Readiness: Evaluates the ability to integrate smart technologies, such as smart meters.

These changes are intended to give property owners and tenants a clearer understanding of energy efficiency and where improvements are needed.

2. Reduced Validity Period

EPCs currently last for 10 years, but the government proposes reducing this to as little as two years, with other options including five or seven years.

This would require more frequent assessments, increasing costs for homeowners and landlords. For landlords, EPCs must remain valid throughout tenancies, meaning mid-tenancy renewals could become a regular requirement.

3. Expansion of EPC Requirements

The proposals suggest requiring EPCs in more scenarios:

• Holiday Lets: Short-term rentals would now need valid EPCs, regardless of who pays energy bills.
• Houses in Multiple Occupation (HMOs): An EPC would be required whenever a room is rented out, applying to the entire property.
• Expired EPCs: A new certificate would be needed immediately upon expiry, even if the property isn’t being sold or let.

4. Heritage Properties

Currently, listed buildings and those in conservation areas are often exempt from EPC requirements. Under the new rules, all heritage properties would require EPCs, though exemptions may still apply if improvements would significantly alter the property’s character.

5. Stricter Compliance and Higher Penalties

Penalties for failing to provide a valid EPC could rise from £200 to £325 or £400, reflecting inflation and stricter enforcement.

My views on the proposed changes

Having trained as an EPC assessor, I’ve seen how the system operates from both a technical and regulatory perspective. While I support the government’s commitment to improving energy efficiency, I have concerns about the practical impact of these reforms:

1.Cost Burden: More frequent EPC renewals and the associated costs of energy efficiency upgrades could strain property owners, particularly landlords managing large portfolios or older properties.

2. Impact on the Private Rented Sector: Landlords are already grappling with rising costs and stricter regulations. These changes could push more landlords out of the market, reducing rental supply and driving up rents.

3. Limited Environmental Impact: The UK contributes just 1% of global carbon emissions. While every effort counts, placing such significant financial and administrative burdens on property owners may not deliver proportional climate benefits.

4. Noise Abatement Issues with Heat Pumps: Heat pumps, often seen as a solution for low-carbon heating, can create noise that may trigger complaints, adding another layer of complexity for property owners.

Implications for property owners and tenants

For Homeowners

The new metrics will provide better insights into energy efficiency, potentially helping homeowners reduce energy bills. However, the cost of frequent assessments and upgrades could be a concern, particularly for older properties.

For Landlords

Landlords face increased costs and compliance requirements, including more frequent EPC renewals, stricter rules for HMOs and holiday lets, and the need to upgrade properties to meet new standards. This could discourage investment in the rental sector, exacerbating housing shortages.

For Tenants

Energy-efficient homes can lead to lower bills and more comfortable living conditions. However, if landlords pass on the cost of compliance, tenants may face higher rents.

How can you prepare?

If you own property, here’s how to start preparing for these changes:

1. Review Your Portfolio: Identify properties that may struggle to meet new requirements, such as older or heritage buildings.

2. Plan for Upgrades: Budget for energy efficiency improvements like insulation, smart technologies, and low-carbon heating systems.

3. Stay Informed: Follow updates on the consultation and seek professional advice to ensure compliance.

4. Have Your Say: Share your views by responding to the consultation, which is open until 26 February 2025.

Have your say

This is your opportunity to shape the future of EPCs and their impact on the property market. You can access the consultation and submit your feedback here:

Reforms to the Energy Performance of Buildings Regime – Consultation

Final thoughts

As a property professional with extensive experience in both regulation and practice, I see the value in improving EPCs to support sustainability. However, it’s crucial that these reforms are practical, affordable, and balanced against the realities of the housing market.

I encourage everyone involved—homeowners, landlords, and tenants—to engage with the consultation process. Together, we can ensure the system evolves in a way that benefits all stakeholders while driving meaningful progress toward Net Zero.

Maxine Fothergill is Managing Director of Amax Estates in Gravesend, a property investor with over 25 years of experience, Past President of ARLA Propertymark, a trainer for the London Landlord Accreditation Scheme (LLAS), and author of “How to Become a Successful Property Investor.”

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Published: 03 January 2025

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The price of a typical UK home saw a 0.7% rise during December 2024 with average prices ending the year at £269,426.

The latest data released this morning by Nationwide has shown that the end of 2024 was very different to the beginning of the year.

 "There was a clear north-south divide in house price performance in 2024 as Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) continued to outperform southern England, with prices up 4.9% year on year."
- Robert Gardner - Nationwide

 According to the data, UK house prices were up 4.7% year on year in December, with Northern regions seeing higher price growth than southern regions. Northern Ireland was the best performing area for the second year running, with prices up 7.1% over 2024 and East Anglia was found to be the weakest performing region, with prices edging up by a marginal 0.5% over the year.

“UK house prices ended 2024 on a strong footing." commented Robert Gardner, Nationwide's Chief Economist, who added "Though prices were still just below the all-time high recorded in summer 2022. House prices increased by 0.7% month on month, after taking account of seasonal effects, following a 1.2% rise in November.

Looking back on 2024

Gardner comments: “Mortgage market activity and house prices proved surprisingly resilient in 2024 given the ongoing affordability challenges facing potential buyers. At the start of the year, house prices remained high relative to average earnings, which meant that the deposit hurdle remained high for prospective first-time buyers. This is a challenge that had been made worse by record rates of rental growth in recent years, which has hampered the ability of many in the private rented sector to save."

“Moreover, for many of those with sufficient savings for a deposit, meeting monthly payments was a stretch because borrowing costs remained well above those prevailing in the aftermath of the pandemic. For example, a typical mortgage rate for someone with a 25 per cent deposit hovered around 4.5% for much of the year, three times the 1.5% prevailing in late 2021, before the Bank of England started to raise the Bank Rate.

“As a result, it was encouraging that activity levels in the housing market increased over the course of 2024 with the number of mortgages approved for house purchase each month rising above pre-pandemic levels towards the end of the year.

Where next in 2025?

Gardener continues: “Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax. This will lead to a jump in transactions in the first three months of 2025 (especially in March) and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes. This will make it more difficult to discern the underlying strength of the market.

“But, providing the economy continues to recover steadily, as we expect, the underlying pace of housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth. The latter is likely to return to the 2-4% range in 2025 once stamp duty related volatility subsides.

All regions saw house price growth in 2024

“Our regional house price indices are produced quarterly, with data for Q4 (the three months to December) indicating that all regions saw price rises over 2024.

“Northern Ireland was the best-performing area for the second year running, with prices up 7.1% over the year. Scotland recorded a 4.4% increase in 2024, whilst Wales saw a 2.7% year-on-year rise.

“Across England overall, prices were up 3.1%, compared with Q4 2024. There was a clear north-south divide in house price performance in 2024 as Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) continued to outperform southern England, with prices up 4.9% year on year. The North was the best-performing English region, with prices up 5.9% year on year. 

“Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 2.2% year-on-year rise. The South West was the best-performing southern region with annual price growth of 2.7%. East Anglia was the weakest-performing UK region in 2024, with a modest 0.5% annual increase.

Property type review

“Our most recent data by property type reveals that terraced houses have seen the biggest percentage rise in prices over the last year, with average prices up 4.4% in 2024.

“Flats saw a recovery in price growth, recording their best year since 2021, with a 4.0% rise. Semi-detached properties recorded a 3.4% annual increase, while detached properties saw a 3.2% year-on-year rise.

“However, if we look over the longer term, detached homes have continued to have a slight edge over other property types, most likely due to the ‘race for space’ seen during the pandemic. Indeed, since Q1 2020, the price of an average detached property increased by nearly 27%, while flats have only risen by c15% over the same period.” 

Nathan Emerson, CEO of Propertymark said: “With a degree of uncertainty still looming regarding borrowing rates and affordability, alongside rises to Stamp Duty for buyers in England and Northern Ireland commencing from April 2025, many people are extremely keen to move sooner rather than later, defying the usual winter lull normally seen this time of year.

“However, once the dust has settled following the anticipated rush heading towards April, buyers and sellers may reap the rewards of a slower-paced market which may allow opportunities for greater negotiation on price from both buyers and sellers.”

Tomer Aboody, director of specialist lender MT Finance, says: “As 2024 came to a close, sentiment remained pretty strong.

“We have seen an increase in prices year-on-year, mostly due to the rate cuts which have made affordability easier and in turn, have brought more buyers and sellers back into the fold. Higher transaction levels have also made the market more buoyant.

“With the stamp duty concession ending in March, 2025 as a whole might not be as positive as everyone hopes but another rate cut early in the year could help ease any pain.”

A north London estate agent and a former RICS residential chairman, says: “Prices have been stronger for cheaper properties and areas but overall more choice has prompted a better balance between supply and not just demand but increasingly proceed-able demand.

"Boxing Day was a good example – a much lower proportion than usual of nosy neighbours as buyers and sellers come to terms with the new normal; interest rates unlikely to fall quickly any time soon whereas wage rises are still exceeding inflation.

“We expect this pattern of sales progressing slowly to exchange with little or no renegotiation or fall through to continue with first-time buyers desperately trying to take advantage of the stamp duty concession before the beginning of April."

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Published: 16 December 2024

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UK Finance has published its housing and mortgage market forecasts for 2025 and 2026 together with projections for 2024 full year numbers.

With rate and cost pressures continuing to ease, the outlook for 2025 is for a gradual improvement in mortgage affordability, feeding into market growth. As interest rates tick down, we expect arrears to continue to fall, with tailored forbearance helping those who need it.

Forecast 2025

Year on year change compared to 2024

Gross Lending – £260 billion +11 per cent

Lending for house purchase – £148 billion +10 per cent

External remortgaging – £76 billion + 30 per cent

New buy to let purchase lending – £9 billion, down 7 per cent

Internal product transfer – £254 billion +13 per cent

Arrears – 99,000, down 5 per cent

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Key figures for 2024

Throughout 2024, lower inflation, rising real wages and gradual cuts in mortgage offer rates began to ease the affordability constraints which held back the market in 2023. This led to modest annual growth in lending for house purchases, although refinancing markets remained subdued. Arrears levels have been helped by prudent lending standards, extensive lender forbearance and low unemployment. The number of customers falling behind on their mortgages looks to have peaked early in 2024 before falling back. While the number of properties taken into possession has risen, this is largely due to historic arrears cases now working through the court system and the numbers are very low compared to historic norms. 

Year on year change compared to 2023

Gross Lending – £235 billion +4 per cent

Lending for house purchase – £135 billion +11 per cent

External remortgaging – £59 billion, down 10 per cent

New buy to let purchase lending – £10 billion +13 per cent

Internal product transfer – £224 billion, down 7 per cent

Arrears – 104,200, down 3 per cent

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James Tatch, Head of Analytics at UK Finance, says: “The mortgage market showed greater than previously expected resilience in 2024 as cost and rate pressures began to recede. Affordability constraints did impact external remortgage activity, but strong competition to retain customers meant those coming off fixed rates could find a new internal product transfer deal without needing a new affordability test.

“In 2025 we are forecasting continued steady growth in both house purchase and remortgage lending as affordability improves further. We are however forecasting a slight fall in buy-to-let lending in 2025.

“The prudent underwriting standards in place for the past decade have helped most customers who might have fallen into difficultly. Arrears look to have peaked early in 2024 before falling back, and we expect them to fall again in 2025.

“Any customer who finds themselves in financial difficulty should speak to their lender at an early stage, as the industry continues to provide a range of tailored support options to anyone who needs help.”

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Market overview: a gradual recovery after a tough year

In 2023 higher interest rates and cost-of-living pressures constrained affordability and drove a significant contraction in mortgage lending. This continued into the early months of 2024 but, from early summer, we saw the effect of real wage growth and falling mortgage offer rates translate into an increase in lending for house purchase.

Residential house purchase lending in 2024 totalled £135 billion, an increase of eleven per cent compared with 2023. Although the number of purchase loans in the year grew by four per cent, activity was still well below the average levels seen in the decade before 2023. In 2025, we expect further gradual improvements in affordability to drive another ten per cent increase in purchase lending, to £148 billion.

Remortgaging activity was relatively subdued in 2024. This was, in part, due to slightly lower numbers of customers with fixed rate mortgages reaching the end of their deal periods and looking to refinance. However, despite some cuts in offer rates and rising real wages, affordability constraints limited the options for customers looking to refinance on the open market. Remortgaging fell by ten per cent to £59 billion in 2024, whilst internal Product Transfer (PT) transactions, which are not subject to affordability tests, fell by a more modest seven per cent to £224 billion. Next year, with more fixed rate deals coming to an end, we forecast growth in refinancing. As affordability continues to ease gradually, remortgaging is expected to grow by 30 per cent to £76 billion, with PT business seeing lower growth of 13 per cent to reach £254 billion.

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Published: 05 December 2024

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The latest Property Market Index Review by London agency Benham and Reeves has revealed that house prices climbed by 0.9% in Q3 of this year.

The agency compiles a quarterly accumulation of house price data from the top four existing indices, from Halifax and Nationwide, Rightmove and sold prices from the UK House Price Index.

Current property values

Based on a geometric mean of all four existing data sets, the index from Benham and Reeves shows the average UK house price sat at £311,154 during Q3 2024.

This marked a 0.9% quarterly increase, the third consecutive quarter of positive growth seen so far this year. On an annual basis, the average UK house price also sat 2.2% higher when compared to Q3 2023.

In London, the current average house price in Q3 2023 was £574,254 during the third quarter of this year.

Whilst this remained flat versus Q2, it did mark a 1.1% increase on an annual basis.

Market Gap Between Mortgage Approval Price (Buyers) & Asking Price (Sellers)

In Q3 2024, the market gap between the average mortgage approved price of a buyer (£278,890) and the asking price expectation of a seller (£370,672) sat at 32.9%.

This market gap had narrowed from 35.5% the previous quarter, suggesting that sellers have been more willing to lower their asking price expectations in order to secure a buyer.

In London, the gap between buyer (£524,685) and seller (£684,210) was 30.4% which also marks a quarterly narrowing, again suggesting that London sellers are more willing to meet in the middle in order to secure a buyer.

Market Gap Between Asking Price (Sellers) & Sold Price (Buyers)

The latest index by Benham and Reeves shows that the gap between the average UK asking price and the average sold price has continued to close.

Across the UK, the average sold price in Q3, 2024 stood at £291,411, -21.4% below the average asking price of £370,672. This market gap had closed from 24.1% the previous quarter and remains slimmer when compared to the 23.5% seen during Q1.

In London, the gap between asking price and sold price sits at -22.9%, having also closed from -25.7% in Q2 and, again, remaining slimmer than the -25% seen during Q1. In fact, it’s the smallest gap between asking and sold price seen since Q1 2023.

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Director of Benham and Reeves, Marc von Grundherr, comments: “2024 has been a far more positive year for the property market and this is becoming abundantly clear when analysing house price trends across each segment of the market.

“We’ve seen consistently positive growth with respect to overall house prices across all three quarters of this year so far and this is despite the fact that buyers are still having to contend with significantly higher interest rates than they’ve become accustomed to in recent years.

“What is clear is that sellers are taking a more pragmatic approach to selling, with the gap between the mortgage approved price of buyers and the asking price expectation of sellers narrowing. As a result, we haven’t seen the previous stalemate across the market whereby sellers refuse to budge on price, whilst buyers simply can’t afford to match them. The result of both parties meeting in the middle has been an uptick in sales, a higher proportion of asking price achieved and a more measured, healthy rate of house price growth seen across the market.”