A quarter of landlords are already buying higher-rated green properties — or ones close to the new standard they intend to upgrade — ahead of tougher energy efficiency proposals, according to a Paragon Bank poll.
The lender says 15% of landlords have recently purchased a property with an energy performance certificate rating of between A and C in anticipation of tougher requirements, its survey of over 1,200 landlords shows.
It adds that a further 10% have bought a D-rated property with a view to upgrading. The average energy performance certificate rating of a UK home is D.
Government proposals say new rental tenancies must have a minimum energy efficiency rating of C by April 2025, which will require landlords to spend thousands on such features as heat pumps, insulation or solar panels. All tenancies must meet this standard by 2028.
However, last month housing minister Michael Gove told the Sunday Telegraph that this timetable might be relaxed, saying that “we’re asking too much, too quickly”.
The lender’s survey adds that 19% of landlords have already made improvements to bring a property’s green rating up to C or above.
While 14% of buy-to-let owners say they are currently retrofitting their properties with energy-saving measures to meet the C standard.
It adds that the incoming measures have led to “a lower degree” of divestment, with 9% of landlords saying they have sold property that would be too expensive to upgrade to meet the new proposed standards.
The study points out that these measures have affected the property-buying decisions of landlords in the future.
It says that 61% of BTL owners say they will target properties that fall into energy performance certificate bands A to C, 18% would purchase properties rated D or E, with the intention of upgrading them and 2% would do this with the least energy efficient properties rated F and G.
The remaining 19% of landlords say that green ratings will not affect their decision-making.
Paragon Bank commercial director Louisa Sedgwick says: “Michael Gove’s recent comments mean it’s looking increasingly likely that any new private rented sector energy efficiency standards will be delayed.
“Nevertheless, it’s encouraging to see landlords are already building on the progress made over the last decade in making privately rented homes more sustainable.
“Most commonly, this has been through buying homes that already meet the new standards proposed by the government, incentivised by green mortgage products.
“But, with a significant proportion of landlords already making upgrades to improve the energy efficiency of the properties they already own, or planning to do so in future, we see a need for financial support as well as education on what can be a complex and costly undertaking, something that presents huge opportunities for the sector.”
