Possible changes to energy performance certificate (EPC) targets are likely to have a dramatic effect on landlord property purchasing habits. This is according to research undertaken by Landbay.
EPCs measure the energy efficiency of properties by conducting thorough checks and giving them a rating between ‘G’ and ‘A’. A ‘D’ rating is the average, ‘G’ is the lowest, and an ‘A’ is the highest.
Under these new rules, new build homes listed on the market must have a ‘C’ grade or above EPC rating by 2025 while existing tenancies must have a ‘C’ grade or above by 2028.
Landlord EPC awareness and property purchases
The Landbay research reveals seven out of 10 buy-to-let landlords (70%) are aware of government proposals that all rental properties must have an Energy Performance Certificate (EPC) rating of A, B, or C.
68% of the landlords surveyed had properties with an EPC rating of D or lower. However, the majority of those (80%) intend to make changes to bring their properties up to at least a C rating.
A large budget and a substantial amount of time are likely to go into increasing the EPC rating of a property which is why landlords are changing their buying habits to make the process easier.
According to the research, some landlords see the changes to EPC ratings as an opportunity. Around 53% of landlords said they would consider buying homes that were D rated or lower and bring them up to at least a C rating.
While 32% of portfolio landlords with four to 10 properties would do the same but only 20% of non-portfolio landlords would choose to buy and upgrade.
Paul Brett, managing director, intermediaries at Landbay, concludes: “Our survey shows that most landlords are aware of the potential new EPC rulings by 2025 and many will have to upgrade their properties to a C rating. Some of them, especially the larger portfolio landlords with 10 or more properties, are looking at how they can turn this to their advantage.”
“Buying properties and making them more energy efficient will raise the value of the property and the rental income landlords can charge, as well as reducing tenant’s energy bills. A few extra thousand pounds spent at the buying stage will be an investment for the longer term.”
“As awareness of EPC requirements and green mortgages improves, I expect to see many more landlords taking advantage of the lower rates offered by the green mortgage.”