Landlords prioritise energy efficiency despite government policy changes

Landlords prioritise energy efficiency despite government policy changes

0:02 AM, 5th April 2024, About 4 months ago 10

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Landlords are now prioritising energy efficiency when purchasing a new investment property, according to new research.

Data from The Mortgage Lender, reveals a quarter of landlords (25%) are now placing a strong emphasis on energy efficiency when buying new properties for their portfolios.

This comes despite the government scrapping EPC targets which would have required landlords to ensure their rental properties had a minimum EPC rating of C.

Landlords are staying ahead of the curve

Chris Kirby, head of sales – Midlands, South and specialist distribution at The Mortgage Lender, said: “It’s encouraging to see that BTL landlords are continuing to adapt and shift their priorities, even though the government postponed the planned introduction of energy efficiency standards for properties in the private rental sector.

“It shows just how committed many landlords are to staying ahead of the curve and anticipating tenant expectations.”

The study also sheds light on the various factors influencing landlords’ property purchase decisions.

While monetary considerations such as price (48%), expected rent yield (29%), and long-term investment potential (23%) remain crucial, other factors such as location (29%), council tax banding (17%), property readiness (16%), and interior layout (16%) also play a significant role.

Mortgages are a key priority for landlords

The research also asked how BTL landlords will buy their next rental property. A quarter (24%) said they would buy as an individual investor with a mortgage, and a further fifth (22%) said they would buy as an individual with cash.

In contrast, 10% said they will buy their next property as a limited company with a mortgage, while 11% plan to buy as a joint investor with a mortgage.

Mortgages continue to be a key priority for landlords amid a tumultuous year for rates. Three out of four (77%) of landlords said that the rate of the mortgage available was an important factor for them when buying a property with a mortgage.

Other factors landlords felt to be important included wanting greater fluidity from lenders such as in the amount they could borrow (76%), the discount on fees (72%), flexibility on criteria (72%), and the support offered by the lender (70%).


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Beaver

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11:57 AM, 5th April 2024, About 4 months ago

I just had an EPC done; that still recommended cavity wall insulation to move from band D to band C. Cavity wall insulation isn't suitable for the property because it would cause problems with damp. Is that also other landlords' experience of recommendations of EPCs?

Reluctant Landlord

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12:18 PM, 5th April 2024, About 4 months ago

Reply to the comment left by Beaver at 05/04/2024 - 11:57
useless, pointless and does not take into consideration of the implications to the fabric of the property itself. Not all recommendations are appropriate.

Exactly what you found - one size does not fit all.

Ergo the EPC is a tick box only exercise and not indicative of what IS viable long term for the property it assesses.

GlanACC

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17:50 PM, 5th April 2024, About 4 months ago

The new Home Energy Model is set to replace the Energy Performance Certificate (EPC) next year.

No one knows if existing EPC certificates will remain valid until they expire. I note from a recent NRLA communication -

What does the NRLA think?

The NRLA backs the overall principles of plans to decarbonise heating and is pleased a new system, less reliant on assumptions, is likely to be more accurate.

However, it does have concerns about the increased time it will take to carry out inspections, and the knock-on impact on landlords’ costs – at a time when landlords are under more financial pressure than ever.

NOTE that they don't seem to be objecting to existing EPCs remaining valid.

Reluctant Landlord

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18:53 PM, 5th April 2024, About 4 months ago

Reply to the comment left by GlanACC at 05/04/2024 - 17:50
I just read about this too - applies to all properties or just new builds? Nothing in media to date as far as I am aware - something else that's just going to pass under the radar I wonder and suddenly be applied??

MORE COST!!! where does this end? Any what if the new EPC drops the current D to an F because its gone fully electric???

Tenant eviction time????

GlanACC

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18:57 PM, 5th April 2024, About 4 months ago

Reply to the comment left by Reluctant Landlord at 05/04/2024 - 18:53
That was the first I heard of it and I am usually on the ball with legislation.

GlanACC

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21:18 PM, 5th April 2024, About 4 months ago

Apparently the government ran a consultation that ended on March 27th this year, guess who they consulted -

Audiences: This consultation will be of interest to several different audiences, such as:
• SAP/RdSAP assessors and assessor accreditation schemes
• Construction industry professionals
• Product manufacturers and suppliers
• Local authorities and other building control bodies
• Academics and consultant

Kept that quiet, no representative from the 'end user' - landlords and homeowners

Helen

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13:16 PM, 6th April 2024, About 3 months ago

Reply to the comment left by GlanACC at 05/04/2024 - 17:50
I didn't know about these changes and I keep my ear close to the ground with landlord issues.
The reason new investors are buying with energy efficiency in mind is obvious. What's the point of buying a place which in a few years, on the government's whim. won't be rentable in a few years if they change the EPC goalposts, or that you can't get a BTL mortgage on it for the same reason. It isn't rocket science.
Anyway, I've had enough and am selling up. Add me to the statistics.

GlanACC

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16:09 PM, 6th April 2024, About 3 months ago

Reply to the comment left by Helen at 06/04/2024 - 13:16
The trouble with buying one that is bang up to date (apart from the fact its rating might slip - I have some that are EPC C but will they still be ?) is that you are paying a premium for them, and will you get the rents to make it worth while

Reluctant Landlord

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9:43 AM, 8th April 2024, About 3 months ago

Reply to the comment left by GlanACC at 05/04/2024 - 18:57
ditto!

Beaver

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11:01 AM, 8th April 2024, About 3 months ago

Reply to the comment left by Reluctant Landlord at 05/04/2024 - 12:18
The recommended changes the assessor put into the EPC to move from Band D to Band C were:

1. Cavity wall insulation.
2. Floor insulation.
3. Photovoltaic panels.

So I emailed the EPC assessor and asked what other measures would be acceptable to move from Band D to Band C, excluding cavity wall insulation. I have an open mind about other measures to improve energy efficiency but clearly there's no point doing it.

I hadn't heard of this 'Home Energy Model' and I wasn't aware of the recent consultation but this 'Home Energy Model' would need to include other options than cavity wall insulation because there's no way I'd create the problems with damp it would cause by filling up the cavity.

Cambridge University recently did a study showing that insulation walls and lofts only brings about a short-term reduction in gas consumption.

https://www.cam.ac.uk/research/news/insulation-only-provides-short-term-reduction-in-household-gas-consumption-study-of-uk-housing

I wonder if this 'Home Energy Model' will just be another blank cheque for insulation companies selling cavity wall insulation.

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