UK Buy-to-Let Investors Prioritise Energy Efficiency in 2024

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New-Build Investments Outpace Existing Properties in the UK Housing Market

According to research by The Mortgage Lender, 25% of landlords prioritise energy efficiency when looking for buy-to-let properties for sale. This marks the continuation of a recent conversation that has dominated property investment circles.

When the Government announced new EPC regulations, landlords worried about the cost of retrofitting their homes with energy-efficient technology like heat pumps, solar panels, smart meters, etc.

Initially, newly rented properties would need to reach an EPC rating of ‘C’ by 2025, while all other buy-to-let properties would need to reach that rating by 2028. However, the Government has since reneged on those plans. Still, energy efficiency is clearly on the minds of many landlords.

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What Else Do Landlords Consider About Buying Properties?

As well as energy efficiency, landlords are focusing on monetary aspects like price (48%), potential rent yield (29%), and long-term investment potential (23%).

They also consider factors that appeal to tenants, such as location attractiveness (29%), council tax banding (17%), move-in readiness (16%), and interior layout (16%).

The research also inquired how buy-to-let landlords plan to purchase their next rental property. 24% intend to buy by themselves with a mortgage, while 22% plan to buy with cash. Conversely, 10% aim to purchase through a limited company with a mortgage, and 11% plan to buy jointly with a mortgage.

Mortgages remain a priority for landlords, with 77% considering the mortgage rate important when purchasing a property. Additionally, factors like borrowing flexibility (76%), fee discounts (72%), criteria flexibility (72%), and lender support (70%) are also significant considerations for landlords.

Chris Kirby of The Mortgage Lender said: “It’s encouraging to see that BTL landlords are continuing to adapt and shift their priorities, even though the Government postponed the planned introduction of Energy Efficiency standards for properties in the Private Rental Sector.

“It shows just how committed many landlords are to staying ahead of the curve and anticipating tenant expectations. As lenders, we similarly want to offer greater flexibility in order to best support BTL landlords, whether this comes in the form of extending our product range or working with brokers to offer the best options for their customer base.”

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What Can Property Investors Do to Find Properties With Good EPC Ratings?

If you’re a buy-to-let investor looking for energy-efficient properties, you may want to focus your attention on new-build properties.

These properties utilise modern building practices and prioritise energy efficiency, reaching higher EPC ratings than the already-built alternative.

In particular, new-build apartments utilise eco-friendly tech and fixtures to appeal to tenants and investors and leave a more positive mark on the environment.

New build developments in Liverpool, like ELEMENT – The Quarter and The Gateway, benefit from this development ethos. ELEMENT became the first eco-property in Liverpool’s residential history, proving popular with investors and tenants alike. Meanwhile, The Gateway takes inspiration from New York-style architecture and is set to facilitate the regeneration of Liverpool’s Pumpfields zone, just outside the Business District.

If you’re interested in new-build investment, one way to acquire these properties is through off-plan investment – purchasing a property straight from the developer, typically through property investment companies.

Not only do investors see perks with this type of investment deal, such as reduced price, but they will likely see the price of the property rise when the developer completes construction.

As such, off-plan investment allows for immediate capital appreciation. These properties are usually found in areas with significant rental yield potential and have well-thought-out interior designs and numerous other perks, satisfying many of the requirements highlighted in this recent study from The Mortgage Lender.

For more buy-to-let insights, check out some of our area guides:

UK Buy-to-Let Investors Prioritise Energy Efficiency in 2024