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Landlords investing in properties with higher EPC ratings ‒ Rightmove

  • 28/06/2023
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Landlords investing in properties with higher EPC ratings ‒ Rightmove
Greater numbers of properties with an Energy Performance Certificate (EPC) rating of at least a C are reaching the rental market, a study from Rightmove has suggested.

The research found that the proportion of properties entering the rental market with such a rating, which were previously for sale, has increased by 16 per cent from January 2019.

By contrast the proportion of properties with a rating of D to G that have entered the rental market has dropped by 11 per cent over the same period.

The data comes ahead of upcoming regulations from the government which will require all rental properties to have at least a C rating from 2025 for new tenancies, which will be expanded to cover all existing tenancies from 2028.

A survey of landlords by Rightmove found that investors are now increasingly likely to avoid properties with lower EPC ratings. Nearly two-thirds, 61 per cent, of landlords said they would not buy a property with a rating of below a C, up from 47 per cent last year.

Meanwhile a third of landlords with lower rated properties plan to sell them rather than improve them, up from the one in five who planned to sell last year.

The study pinpointed a host of challenges in the rental market which are prompting landlords to sell. Almost half, 47 per cent, express concern around government sentiment towards landlords, while 41 per cent were put off by rising taxation. A third also noted increased compliance requirements, and a quarter were concerned about the rising cost of buy-to-let mortgages.

Attitudes towards properties with lower EPC ratings varied, according to the study, depending on how many properties were owned by the landlord. Those who already own five or more properties were more likely to look to increase their portfolios in the next 12 months than those who own just one property.

Tim Bannister, property expert at Rightmove, said that while the upcoming changes to EPC legislation were a growing concern for landlords, the data suggested that many were “getting ahead and focusing their investment” on properties that already meet the new minimum standards.

He continued: “While some may sell up, those with bigger portfolios are more likely to be planning to carry out the necessary improvements to increase the EPC rating of their lower rated homes and are more willing to invest in lower EPC rated properties, potentially to improve for the future. 

“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.”

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