Landlords opt to buy homes with an EPC rating of C or higher

Landlords are increasingly investing in energy-efficient properties that have an EPC rating of C or higher, a study reveals.

Rightmove says that since January 2019, there has been a 16% increase in the number of rental properties entering the private rental sector with an EPC rating between A and C.

Those homes had previously been listed for sale.

However, rental properties with lower EPC ratings of D to G have seen an 11% fall.

The trend comes ahead of a government proposal to implement a minimum EPC rating of C – though there is no deadline for this to happen.

‘Upcoming changes to EPC legislation’

Rightmove’s property expert, Tim Bannister, said: “Upcoming changes to EPC legislation is a growing concern for landlords.

“However, the data suggests that many are getting ahead and focusing their investment on properties that will meet the new minimum standard and bringing these to the rental market.”

The research shows that landlords with larger portfolios are more likely to carry out the necessary improvements to boost the EPC rating of lower rated homes.

These portfolio landlords are also more willing to invest in lower EPC rated properties and improve them.

Mr Bannister said: “This suggests there may be a changing of the guard over the next few years, with landlords with bigger portfolios buying up lower EPC properties being sold by landlords with smaller portfolios, to improve and then rent out again.”

Steering clear of properties with lower EPC ratings

The Rightmove survey also reveals that landlords are now steering clear of properties with lower EPC ratings.

The property platform found that 61% of landlords would now hesitate to purchase a property with an EPC rating below C – up from last year’s figure of 47%.

Also, around one in three landlords who currently own properties with a lower EPC rating are considering selling them off rather than investing in upgrades to improve their energy efficiency.

This figure has risen from 20% who held the same intention last year.

Highlights a growing challenge within the PRS

This shift in investing in higher rated homes also highlights a growing challenge within the PRS which is leading to some landlords putting their properties up for sale.

The Rightmove study found that 16% of properties listed for sale had been available for rent previously, marking an increase from 13% in January 2019.

Several factors are influencing this change, including concerns about the government’s stance on landlords (47%), increased taxation (41%), stricter compliance requirements (33%), and the escalating cost of buy-to-let mortgages (25%).

Despite these challenges, landlords’ attitudes towards EPC ratings and their portfolio plans for the upcoming year, Rightmove says, largely depend on the number of properties they own.