Is Energy-Efficiency Essential for Buy-To-Let Investment?

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How Important is Energy Efficiency to Homebuyers and Renters?

Natwest and S&P Global recently published their latest joint report detailing current consumer attitudes to energy efficiency in the home.

The Greener Homes Attitude Tracker explores how homeowners, home buyers, and rental property tenants feel about sustainability and energy efficiency and what actions they plan to take based on these attitudes.

The researchers found that 75% of renters would like the energy efficiency of their property to be improved amid elevated energy prices and awareness of environmental issues.

Considering the energy efficiency of a property has become a significant consideration when investing in buy-to-let, let’s take a look at the data in more detail.

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Why are Renters Becoming More Eco-Conscious?

According to the report, rental properties are typically less well-insulated than owner-occupied homes, including tanks, pipes, and cavity wall insulation. Data found that 42% of rental properties are well insulated compared to 58% of owner-occupied homes.

Participants who resided in rented accommodation were asked if they expected to pay more in rent in 2024, and 63% responded that they expected their landlord to raise rent in the coming year. 18% said that they were “certain to”.

As the majority of renters believe their rent is set to go up, the researchers asked them if sustainable home improvements should be made to the property to help offset the expected rental cost increase. 75% of those expecting a rise in rents agreed (39% strongly agree and 36% tend to agree).

It seems that it’s not only anxiety surrounding sustainability that drives renters to be more eco-conscious when searching for a property for long-term rent but also awareness of the volatility of energy prices, proved by the recent energy crisis.

Further reading: To find out more about the UK property industry, take a look at some of our buy-to-let area guides covering topics such as Rotherham investment properties, and buy-to-let property in Cheltenham.

What Green Features do Homebuyers Look for?

Natwest’s research shows that 39% of prospective homebuyers hoping to buy a property over the next decade responded that the home’s EPC rating was a very important factor. This is a significant number, but other features and facilities ranked higher in the priorities list, including cost (68% replied with “very important”, location (63%), and internet speed (51%).

So, which green upgrades make a home more appealing?

The report states that homebuyers consider some eco-features a “must-have”. Most respondents see double-glazed windows as “essential” (34%) or “very important” (36%). Loft insulation is considered “essential” by 26% and “very important” by 33%.

The report also found that upfront costs were the most common barrier to starting energy-efficient home upgrades. 67% of respondents worried about the cost and stated that making improvements would be simply too expensive, while 55% said they were reluctant to take on debt, and 37% said that it would take too long to see the savings on energy bills.

The cost of upgrading a home to make it more energy efficient is a common worry among homeowners who otherwise would like to benefit from a greener property. This may explain the considerable increase in net zero new build housing, as trends shift towards newly-built properties and eco investment as a way to ensure that a home is as energy efficient as possible, without the need for pricey retrofitting.

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Is Energy-Efficiency Essential for Buy-To-Let Investment?