Buy To Let
Majority of renters look for energy efficient properties
A study by the lender, which specialises in buy-to-let mortgages, found that 58% of private renters would be less likely to look at a rental property if they were aware it had an EPC rating of D or below.
Shawbrook also found there is still a significant knowledge gap around EPC (Energy Performance Certificate) ratings and energy efficiency. An EPC rates a property based on its energy efficiency via a scale from A to G, with A being the most energy efficient.
As part of its Confronting the EPC Challenge report, it found that young private renters are particularly engaged on energy efficiency, with 72% of renters aged 18 to 34 saying they always check the EPC rating of a property before making any decisions. This is compared to 52% of those aged over 55-years-old.
High energy costs
With energy costs expected to stay high this winter and beyond, energy efficiency has become an increasing priority for many homeowners and tenants.
However, the research, which surveyed more than 1,000 private renters, highlighted a significant knowledge gap surrounding energy efficiency ratings. Just 7% of respondents felt they ‘know a lot’ about EPC requirements, while a quarter (27%) of tenants said they have heard of EPC requirements but ‘don’t know anything about them’.
A further quarter (27%) had never heard of them, with half (56%) of renters admitting to not knowing the rating of their current property.
Meanwhile, figures from the Office for National Statistics (ONS) found that across the UK six in 10 (60%) adults said they were somewhat, or very, worried about keeping warm in their home over winter. About a quarter (24%) said they had been occasionally, hardly ever or never able to keep warm in their home in the two weeks before the latest ONS Opinions and Lifestyle Survey was carried out.
More than half (56%) of adults said they were reducing their energy use because of rising costs, and almost half (47%) said they were finding it very or somewhat difficult to pay energy bills.
Energy efficiency rules
While soaring energy costs have brought this issue to the forefront, improving the energy efficiency of buildings is a key priority for the government in the move to net zero.
In 2015, new laws set Minimum Energy Efficiency Standards (MEES), stating that private rented property in England and Wales must have an EPC rating of E or above. These came into force on 1 April 2018 for new tenancies, and on 1 April 2020 for existing tenancies.
From 2025, the minimum EPC band will be C for all new tenancies, while existing tenancies will need to comply from 2028.
Improvements to properties
Previous research from Shawbrook showed that the energy crisis had prompted more landlords to make improvements to their properties. A quarter (26%) have made energy efficiency upgrades to help reduce energy bills for their tenants.
Emma Cox, managing director of real estate at Shawbrook Bank, said: “With an unprecedented energy crisis, the energy efficiency rating of our homes has become increasingly important. However, the research also indicates that we, as an industry still have much to do in terms of educating those in the rental market on this issue.
“Interestingly young renters are paying closer attention to the energy efficiency of their properties. While we don’t know whether this is driven more by cost or an interest in sustainability, landlords should assume that it’s only going to increase in importance for tenants.
“Landlords are already making changes to their properties to support their tenants and bring their properties up to the standard that is likely to soon be expected. However, this can be a costly exercise, particularly with the increasing costs of materials and labour.”