Investors move towards new-build flats means London’s landlords tend to buy the most energy-efficient buy-to-lets anywhere in England and Wales. Here, two-thirds (66%) of new purchases made this year already had an EPC rating of C or above. While further North, investors are more likely to buy higher-yielding, but older and less energy efficient terraced housing stock. Just 34% of investors in the North East bought a buy-to-let with an EPC rating of C or above.
As well as reducing emissions, the push for higher EPC ratings will also save tenants money. The average tenant moving from a home rated D up to one rated C will save an average of £285 per year on their gas, electricity and water bill at current prices. A tenant moving from a home rated E to one rated C will save £725 annually. While, unless exempt, most homes with an F or G rating can no longer be let, the savings from an upgrade to C stand at £1,348 and £2,404 respectively.
If all privately rented homes with an existing EPC rating of D-G were upgraded to at least a C, it would save tenants in England £844m in utility bills each year, or £396 per household. These improvements would leave the average privately rented household paying £326 less in utility bills than the average owner-occupier.
Given it will prove impossible for all homes to secure an EPC rating of at least a C without significant cost, it’s likely to mean older homes will become considerably less attractive to landlords. Instead, investors may focus their strategy on buying new builds, with rental homes becoming concentrated in blocks or streets where properties already hold a C rated EPC certificate or where it’s possible to achieve this without significant work.