Landlords face steep challenge to meet EPC targets – Shawbrook
2 years ago | 7 comments
Upgrading to meet EPC standards adds £20k to PRS house value
12:05 AM, 18th October 2024, 2 years ago
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Greener rental homes can command a premium of nearly £20,000 compared to less energy-efficient properties, research reveals.
According to a report by The Mortgage Works (TMW), landlords are facing a raft of challenges to meet the requirement for PRS homes to have an EPC C rating by 2030.
The lender’s research also found that landlords could increase their rental income by up to 7% – around £70 per month on a typical English property – by investing in green improvements.
The North of England saw the biggest potential boost, with house prices up to 15% higher for greener properties and rental income up by 8%.
In London, landlords could see a rental premium of up to 12%.
‘Long-term gain with green retrofitting’
TMW’s head of buy to let, Dan Clinton, said: “Our analysis shows there can be long-term gain with green retrofitting through increased property value and improved rental yields.
“But it will be a hard slog for many landlords to meet this ambitious timeline to bring their homes up to spec, particularly those who have had to absorb higher mortgage rates and bigger tax bills in recent times.”
He adds: “We need government to step up and provide the necessary support for landlords if they expect that change to happen.”
Landlords not willing or able to invest
Despite the financial benefits, more than one in eight landlords surveyed said they were not willing or able to invest in their properties to meet the 2030 deadline.
Now TMW is calling on the government to provide greater incentives, such as grants for difficult-to-retrofit properties and tax relief for retrofitting costs.
It says doing so would make retrofitting more financially beneficial for landlords – who would also enjoy a boost to the house price and rental income.
Also, retrofitting tax reliefs would also help to reduce the energy bills for tenants and assist the country in meeting its wider Net Zero targets.
Lack of incentives
Mr Clinton said: “As history shows us, positive change can be painstakingly slow when there is a lack of incentives.
“Alongside this, there needs to be an effective framework for energy efficiency including clarity around the future of EPCs, information on energy efficiency improvements and skills training to ensure there is a workforce able to deliver green improvements at scale.”
He added: “The time to act is now – we must consider how we make it as appealing as possible for landlords to pour investment into their properties.
“Anything less will fall flat.”
Tags:
2030 EPC requirements, Boosting House Value with EPC Improvements, Buy to let, energy efficiency, energy rating 2030 deadline, EPC, EPC Upgrades for Landlords, government incentives, green rentals, Green Retrofitting for UK Landlords, landlord support, Net-zero targets
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Member Since December 2023 - Comments: 1586
8:46 AM, 18th October 2024, About 2 years ago
It may add some value to some rental properties. It won’t add £20k to my £100k properties. If it does, I’d be justified in increasing rent by up to 20%
Offering buyers or new tenants a couple of hundred pounds off their energy bills won’t make the property worth £20k more.
Finally, houses are unaffordable for many. If this outrageous claim was true, how does this help them?
Member Since February 2022 - Comments: 203
8:56 AM, 18th October 2024, About 2 years ago
How many tenants would actually look at an EPC as a deciding factor of what to rent. Energy usage is mostly down to lifestyle. If they really knew how EPC works they know they are not worth the paper written on. Probably would save more a year turning the thermostat down 1C and putting on a jumper!
Member Since December 2015 - Comments: 292
10:30 AM, 18th October 2024, About 2 years ago
What a load of b@ll@ck5!
Member Since July 2023 - Comments: 180
12:31 PM, 18th October 2024, About 2 years ago
What does it matter what the ‘worth’ of a BTL is other than if you are going to remortgage unless looking to sell. In which case do the upgrade as part of a pre sale make over
Member Since June 2019 - Comments: 781
12:48 PM, 18th October 2024, About 2 years ago
70 per month is how much exactly after taxes, this barely touches the interest on the 10k you have spent let alone capital repayment in a suitable time frame.
Oh and almost half of that 20k gain could be lost in CGT.
Member Since October 2013 - Comments: 1642 - Articles: 3
2:30 PM, 18th October 2024, About 2 years ago
How many landlords on here have upgraded their properties to EPC C, and increased their rents accordingly?
Member Since September 2022 - Comments: 32
3:54 PM, 18th October 2024, About 2 years ago
removing a gas boiler for heat pump frightens potential buyers off.
adding solar panels also deters buyers.
To get my property from D to a C i need to take 1 of 2 measures
My EPC quotes floor insulation £6000 to save £78 per year energy (a 1.3% return on investment)
Or Solar Panels £8000 to save £329 per year energy (4.1% return).
Increasing the rent to cover the outlay will only make tenants poorer.
I
Member Since December 2023 - Comments: 1586
10:21 PM, 19th October 2024, About 2 years ago
Reply to the comment left by NewYorkie at 18/10/2024 – 14:30
I increased three of mine by spending just £218 on loft insulation in one property and correcting the previous assumptions in two others.
It’s all nonsense.
Member Since January 2023 - Comments: 145
10:44 PM, 19th October 2024, About 2 years ago
Reply to the comment left by NewYorkie at 18/10/2024 – 14:30
Generally, boosting EPCs occurs at the same time as carrying our other improvements. Yes it boosts potential rental value but actually maximising the rents charged doesnt necessarily maximise things on the bottom line! A satisfied tenant pating 85 – 90 percent of potentail rental value produces a better income if they stay put for many years with no voids and no reletting costs. It is not something kournalists and Newbies would necessarily think of but as landlords we often make more by charging slightly lower rents than others lettinf a virtually identical home.
Member Since October 2013 - Comments: 1642 - Articles: 3
11:09 AM, 20th October 2024, About 2 years ago
Reply to the comment left by Contango at 19/10/2024 – 22:44
Yes. Where you are not responsible to investors for RoI, you can take a longer term view of the overall profitability over a number of years, spread across all properties.
I did that for many years, and soon after I sold up in London, I took a £20k hit from a reckless tenant. It wiped out nearly 10 years profits on that property which, for a newbie, would probably have been end of game. It hit me hard, and destroyed my enjoyment of being a landlord, but I could look at 20+ years of good returns and profits, and count myself lucky.