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COMMENT: Aiming for net zero makes good business sense

epc check

Last September the Prime Minister announced that landlords would no longer be required to meet the minimum EPC minimum energy rating of C by 2025 (for all new tenancies) and 2028 (for existing tenancies). But it’s important to realise this respite may only be temporary: whatever the outcome of the next general election, there is a strong likelihood that the Minimum Energy Efficiency Standard (MEES) or something similar will reappear.

Energy efficiency is increasingly becoming a necessity both due to the cost of living and the climate emergency. According to our recent survey, almost three quarters (70%) of respondents nationwide would like their property to be more eco-friendly. More than half (56%) said that they would specifically seek out a property with these qualities, while two-thirds (66%) revealed they would choose a property with eco-friendly features to buy or rent, over one without.

Carbon footprint

Any work carried out now will help with future regulations, as well as reducing your carbon footprint, and providing a more energy efficient home which could attract a higher rent. Making the changes can be financially prudent too. Legal & General research shows that 13% of renters are willing to pay a premium for a low carbon property - allowing landlords to recoup the costs. With tenants’ bills reduced by £276 a year on average (according to The Economy 2030 Inquiry  Hitting a Brick Wall) landlords can recoup the initial outlay and derive longer term benefits from their investment.

Wise investment

There is also evidence that investing in energy efficiency is a wise investment.  According to BuyAssociation, over half of portfolio landlords use EPC ratings as an investment tool, buying properties rated D or lower, and using the EPC structure to determine the necessary renovations to generate a higher resale or rental price. The figure is higher among those with the most properties, decreasing in line with the number of properties owned. It is substantiated by research from Hamptons in 2022 which revealed that property investment trends are leaning towards more energy-efficient buildings, with 50% of investors buying properties rated A-C, up from 39% in 2021 and 33% in 2020.

Similarly, green mortgages can be an astute financial investment due to the preferential rates that they offer.

Relative benefits

The relative benefits of the range of options available -which includes cavity wall insulation, double glazed windows or energy efficient doors, draught-proofing gaps and cracks, energy efficient boiler, LED light bulbs, loft insulation, smart meters, solar panels, and solid wall insulation - depend on technical specifications such as wall types and planning restrictions (ie. if the building is listed or in a conservation area), your reasons for making the change, your budget and whether you intend to carry out the work yourself or use a professional.

Whether you want to put additional investment into your portfolio, gain a higher monthly income, help your tenants or aim for the increasingly necessary and widely acknowledged aspiration to meet net zero, increasing the energy efficiency of a property is undoubtedly of value.

* Kim Lidbury is group director (property management) at Leaders Romans Group


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