Purchasing a buy-to-let? Be driven by the EPC rating
New Government regulations that will tighten energy efficiency standards in the private rented sector are prompting landlords to look more closely at their future investments, as well as how they improve their existing stock.
Changes to minimum energy requirements
The Government wants all privately rented buy-to-lets to achieve an EPC rating of C by 2028, although it remains to be seen if all new and renewing tenancies will have to meet the new standard in 2025 – we’re waiting for an update on whether this deadline is extended. The changes ahead will force many landlords to make significant improvements to their properties in order to upgrade their energy performance, especially as 71% of landlords own buy-to-lets with an EPC of D or less. As an EPC is a legal requirement, there is no escape for landlords who could have to make hefty investments in order to comply.
Paying the price for efficiency
For many landlords, meeting the new EPC standards will mean investing in eco improvements in existing buy-to-lets. The costs for some properties could easily spiral into the tens of thousands, especially when you consider solar panels are around £5,000-£8,000 and an air source heat pump is around £10,000 to buy and install. While landlords will have to pay upfront for the work, they will have to weigh up whether they can raise their rent to recoup costs or risk eroding already slim profits of just £7 a year.
Avoiding low EPC properties
Landlords and investors looking to expand their portfolios are already taking action by avoiding the purchase of properties with poor EPCs. Research by Shawbrook Bank found that a quarter of landlords surveyed would avoid buying a property with a low EPC rating, while 15% would only buy properties built in the last 20 years.
In addition, results from a recent Landlord Panel research report found that almost 60% of those looking to purchase a buy-to-let in the next year would consider properties rated C or above, and landlords are more likely to sell an investment or property portfolio where the homes are rated D or below.
Be prepared for your next investment
These results clearly show a trend for landlords considering the financial and logistical impact that incoming EPC regulations could have. The properties for sale with Move Places are clearly listed with the home’s current EPC, together with its potential rating. This can help property investors make quick, informed decisions on their next purchase to ensure they don’t end up with an energy inefficient – or even illegal - investment.
Browse our properties for sale and make an enquiry online now. If you’re looking to sell a property, we can help with that too, so contact us for a free valuation.