Tenants prioritise EPC ratings when choosing a home

As tenants increasingly seek more energy-efficient homes, many landlords are choosing to sell properties with lower EPC ratings, according to a new report.

A report by Hillarys reveals a stark postcode divide and EPC upgrade challenge for landlords, with some property types costing nearly £1,400 more than others per year to heat.

As previously reported on Property118, almost two in five landlords (38%) intend to sell their property in the next year, (38%), with energy efficiency requirements cited more often than any other factor influencing their decision to sell.

Larger and detached properties may require greater retrofit investment

Hillarys warn lower EPC-rated properties may become more difficult to let, as 86% of renters are now prioritising energy efficiency when choosing a home, and more than half (52%) are willing to pay a 10% premium for a higher-rated property.

The retail company say lower-rated EPC properties expose tenants to higher energy costs, with an E-rated property (£1,942) costing 313% more per year to heat on average than an A-rated property (£470).

The findings reveal landlords will have to spend thousands of pounds on EPC improvements, as detached properties have the highest heating costs. In the UK, the majority of people live in houses (78%), which are the least energy-efficient and the most expensive property types to heat.

Detached properties are typically the most costly, with detached houses averaging £1,974 per year, more than triple the annual cost to heat an enclosed end-terrace flat (£574).

Hillarys warn larger and detached properties may require greater retrofit investment to remain competitive if tenants continue to choose homes based on running costs.

Small cost-effective measures can improve tenant appeal

Lisa Cooper, head of product at Hillarys, says landlords can take smaller, cost-effective measures that can improve tenant appeal while longer-term EPC work is underway.

She said: “Retaining heat by preventing air leakage at windows is key to ensuring bills stay low and properties warm. Small, cost-effective changes, such as sealing draughts, using thick curtains and ensuring windows are properly insulated, can all help.

“Another great solution to maintaining heat inside is installing thermal blinds, which have a unique honeycomb structure. This clever design traps air within its cells, providing an extra layer of insulation at your windows, reducing heat loss by up to 55%.”

In York, almost two-thirds of homes have an EPC rating of D or below

The study also reveals that more than half of the properties in the top 10 costliest areas to heat have an EPC rating of D or lower.

In York, almost two-thirds of homes have an EPC rating of D or below, and in Stoke-on-Trent, more than half (52.03%) fall into the same category.

Historic and coastal locations tend to have the highest energy costs, including York (£1,181), Dundee (£1,134) and Bath (£1,064), where older stone buildings and exposure to harsher weather conditions contribute to rising energy bills.