Though they can be expensive to install, research shows EPC improvements can increase landlords’ profit margins if they offer ‘bills included’ rentals.
Discussions surrounding home energy improvements – particularly heat pumps -dominated the housing sector last year and it seems they’re coming full force into 2025.
Though they made headlines, the reception heat pumps receive are largely negative. From noise levels to the cost of instalment, the uptake of the technologies have so far been small, even after the government introduced the low-carbon heat scheme last year to reduce the upfront cost of installing them.
However, new research from epIMS, the EPC and energy efficiency platform developed for landlords, has revealed that greener home improvements can be kinder to landlords’ pockets in the long run, which might be enough of an incentive to convivence them to make the switch.
Landlords that will benefit more, according to the research, is those who offer ‘bills included’ rentals, which have begun to skyrocket – experts found 14% of all current rental properties on the market offer the cost of bills included within the monthly asking rent.
What’s more, the number of rental properties offering bills included within the asking rent has increased by 57% in the last year alone.
To conduct the research, epIMS analysed the current average energy bill for each property type based on its EPC rating and how the cost required to power a rental differs based on energy efficiency.
The figures show the average property with an EPC rating of D has an average energy bill of £2,513 a year and by upgrading to a C it would slash this cost by 29%.
Though the latter is impressive, the jump from upgrading a G rated property to a C is spectacular. Experts discovered landlords could save £4,240 per year, cutting their energy bill by 70%.
‘Landlords have been hit by a string of legislative changes designed to dent the profit margins of their buy-to-let portfolio, not least the recent hike to second home stamp duty costs, so they can be forgiven for viewing the mandatory EPC C rating as yet another layer of unnecessary red tape to adhere to by 2030,’ said Craig Copper, chief operating officer of epIMS. ‘However, with more and more landlords offering the cost of bills included within their asking rents, making EPC improvements now could see them boost their profit margins, as they could dramatically reduce the energy costs associated with their property.’
News of the research has come following new government guidelines which state landlords will be required to hold a mandatory EPC rating of C or above by 2030 – making changes now will only help landlords and tenants later.
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