Landlords stand to gain a substantial financial boost by investing in energy-efficient rental properties, with greener homes commanding a price premium of nearly £20,000, according to new research by The Mortgage Works (TMW). The findings come as property owners grapple with looming government regulations requiring private rental sector (PRS) homes to achieve at least an EPC (Energy Performance Certificate) rating of C by 2030.
The study reveals that landlords who upgrade their properties to meet these standards could not only increase their property value but also enjoy a 7% rise in rental income. This translates to an additional £70 per month on an average rental property in England.
Northern England and London Lead the Way
The research highlights that greener homes are especially valuable in certain regions. In the North of England, energy-efficient properties are attracting price premiums of up to 15%, with rental income increasing by 8%. Meanwhile, London landlords could see rental premiums as high as 12%, further underlining the financial incentives of making eco-friendly upgrades.
Long-term Financial Gains from Green Retrofitting
Dan Clinton, head of buy-to-let at TMW, emphasised the long-term benefits for landlords who invest in green improvements. “Our analysis shows there can be long-term gain with green retrofitting through increased property value and improved rental yields,” he said. However, Clinton acknowledged that the journey to meet the 2030 EPC requirements would be challenging, especially for landlords already burdened by rising mortgage rates and higher taxes.
“We need the government to step up and provide the necessary support for landlords if they expect that change to happen,” Clinton added.
Many Landlords Reluctant or Unable to Invest
Despite the potential rewards, TMW’s research found that over 12% of landlords surveyed are either unwilling or unable to invest in the necessary improvements to meet the 2030 deadline. In response, TMW is urging the government to introduce greater incentives, such as grants for difficult-to-upgrade properties and tax relief for retrofitting costs.
By easing the financial burden on landlords, TMW argues that such measures could not only increase property and rental values but also lower energy bills for tenants and help the UK meet its broader Net Zero targets.
Call for More Government Action
Clinton warned that without strong government intervention, the pace of progress could be slow. “As history shows us, positive change can be painstakingly slow when there is a lack of incentives,” he said. He also called for a comprehensive energy efficiency framework, which would include clarity on EPC regulations, detailed information on energy-saving improvements, and skills training for a workforce capable of delivering large-scale green upgrades.
“The time to act is now – we must make it as appealing as possible for landlords to invest in their properties. Anything less will fall flat,” Clinton concluded.
With the 2030 deadline fast approaching, the pressure is mounting for landlords to green.