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Energy Efficient buy to lets seen as hedge against inflation

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Tue 12 Apr 2022

Energy Efficient buy to lets seen as hedge against inflation

Unsurprisingly, perhaps, buy to let investors are becoming increasingly keen on upgrading homes to make them more energy efficient according to new data from a lettings management firm.

The study - by PropTech platform GetGround - surveyed hundreds of landlords across the UK during February and revealed that a large proportion are looking to mitigate the impact of high inflation on their investments by energy upgrades to existing rental properties. 

New government rules state that by 2028 all rental property must have achieved an EPC rating of grade C or higher. 

Asked their view on these new regulations in the context of rising inflation, some 82 per cent of investors agreed that the rules will help reduce the impact of high energy costs on families who rent. 

With the annual cost of energy set to increase by an average £700 per household, the study also found that 69 per cent feel a responsibility to help their tenants mitigate the impact of the cost of living crisis on their lives, and 34 per cent believe making energy efficiency upgrades to their properties, thereby helping reduce tenants’ energy spend, goes some way to providing that support. 

Half of all buy to let investors intend to make upgrades to their rental property to achieve EPC ratings of grade C or above within the next 12 months. A fifth will make the changes within the next six months. 

Fewer than a third of landlords said they are now more likely to invest in new builds as a result of living with higher inflation, and a similar proportion indicate an intention to invest only in properties with EPC ratings of grade C or higher in future. 

“Newer builds and other properties where higher performing energy efficiency standards have already been achieved are, understandably, always going to be attractive to landlords. Yet, observing landlords knowingly commit to investing in underperforming property when mandatory rules about EPC ratings are just around the corner indicates that many landlords continue to pick property that they know they can add value to” explains Moubin Faizullah Khan, GetGround’s chief executive.

“This isn’t just good economics for them, but goes a long way to helping to continually improve the quality of much-needed rental stock across the whole of the UK.”