Landlords in the north of England and the Midlands are more likely to recoup their initial investment in energy saving improvements within five years, according to new research.

The Mortgage Works reveals that combined with higher potential rents in these regions, landlords might benefit from making the investment needed to move from an EPC D band to C. In contrast, its data suggests no rental uplift in the South of England and that on average, the benefits from upgrading properties here are unlikely to outweigh the costs. While there is a rental benefit in London, the limited property value uplift means costs are often likely to exceed potential financial benefits.

The lender’s figures suggest that when landlords are purchasing buy-to-let properties, those rated A or B attract a significant premium of 12.2%, compared to a similar property rated D. In 2024 there was a 10.9% premium.

Premium

The North of England sees the highest premium for an A or B-rated property (19.1%), while this remains lower in London (6.9%)

Meanwhile, an A or B-rated property currently attracts an 8.1% rental premium compared to a similar D-rated property, up from 7% in its 2024 research. It estimates that for the typical rent in England (£1,075), this equates to a premium of £85 per month.

The value that buy-to-let purchasers attach to more energy efficient properties continues to be significantly greater than owner occupiers. For example, an A or B-rated house bought by someone looking to live in the property themselves only attracts a 1.6% premium.

Rental

The north of England now sees the highest rental premium, with an A or B-rated property commanding a 13% higher monthly rent, according to The Mortgage Works. The south of England continues to see a more modest impact on rents from energy efficiency, with an A/B-rated property attracting a 5% premium.

London has the most energy efficient properties, with around 65% rated C or above. Meanwhile, East Midlands and Yorkshire and The Humber have the least efficient properties, with just over a third rated C or above. London has a much higher proportion of flats, which tend to have better energy efficiency ratings than other property types.

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