14th
Aug 2023
Latest research from a lender has found that the threatened stricter energy efficiency requirements for private rental properties coming into force, are causing a shift in BTL buying patterns as 25 per cent of landlords are purchasing higher rated properties.
The lender’s research of nearly 1,200 PRS landlords found 15 per cent have invested in properties with an EPC rating of between A and C because of the proposed tougher standards; 10 per cent that purchased D rated properties are considering upgrading them to C and above.
The government’s proposals is for any new tenancies, properties must have a minimum C EPC rating by April 2025 and by 2028 all tenancies must meet this requirement.
Michael Gove Secretary of State for Levelling Up, Housing and Communities has recently ‘suggested’ that the timescale of the proposals may be delayed.
The lender’s research has found that the EPC proposals are persuading landlords to err on the side of caution as 59 per cent are either buying properties with higher EPC ratings or upgrading their properties to meet A- C requirements or buying, 19 per cent have already done so, 14 per cent are currently retro fitting their properties to achieve a C or above rating, or intend to buy higher rated properties.
The energy performance rating proposals have caused high numbers of landlords to leave the sector. The survey found that 9 per cent sold their properties because of the upgrade costs are prohibitively expensive to achieve a C rating and a further 7 per cent sold properties because it was impossible for their properties to attain the standards.
The survey included a question on how EPC ratings would affect their decisions when purchasing new properties with 61 per cent saying they would certainly buy those with A-C ratings, 18 per cent would buy properties rated EPC D or E with the intention of upgrading them.
However, 19 per cent said the proposed ratings would not affect their future decisions on buying properties.
A spokesman for the lender, said: “Michael Gove’s recent comments mean it’s looking increasingly likely that any new PRS energy efficiency standards will be delayed. Nevertheless, it’s encouraging to see landlords are already building on the progress made over the last decade in making privately rented homes more sustainable.
“Most commonly, this has been through buying homes that already meet the new standards proposed by the Government, incentivised by green mortgage products. But, with a significant proportion of landlords already making upgrades to improve the energy efficiency of the properties they already own, or planning to do so in future, we see a need for financial support as well as education on what can be a complex and costly undertaking, something that presents huge opportunities for the sector.”
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