07 Mar 2022

New research suggests that some landlords are now deliberately choosing to buy properties with weak EPCs in order to upgrade and benefit from capital appreciation.

Research by specialist lender Landbay suggests that seven out of 10 Buy To Let landlords are aware of government proposals that all rental properties must ultimately have an EPC rating of A, B or C – that awareness is particularly strong amongst portfolio landlords. 

The research also reveals that 68 per cent of the landlords surveyed had properties with an EPC rating of D, E, F or G. However, the majority of those – four out of five – intend to make changes to bring their properties up to at least a C rating.

Current proposals (widely expected to become law) are that new tenancies must be C rated by 2025 and for existing tenancies by 2028.

Landbay says landlords are now beginning to see these changes as an opportunity: 53 per cent of portfolio landlords owning 10 or more units said they would consider buying homes that were D rated or lower and bring them up to at least a C rating.

This compares to 32 per cent of portfolio landlords with four to 10 properties who would do the same but only 20 per cent of non-portfolio landlords would choose to buy and upgrade.

Paul Brett, managing director, intermediaries at Landbay, says: “Buying properties and making them more energy efficient will raise the value of the property and the rental income landlords can charge, as well as reducing tenant’s energy bills. 

“A few extra thousand pounds spent at the buying stage will be an investment for the longer term.

“As awareness of EPC requirements and green mortgages improves, I expect to see many more landlords taking advantage of the lower rates offered by the green mortgage.”

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