The government’s proposal to ensure that all new rental properties have an EPC rating of at least a C by 2025 or 2026 is already shaping investor buying behavior, according to Hamptons, which adds that, while the proposal remains at the consultation stage, many landlords are already hedging their bets.  

The firm stated: ‘So far this year, the share of homes bought by investors with an EPC rating of A-C is running at 50%, the highest figure on record, and up from 39% in 2021 and 33% in 2020. This uplift has been driven by two factors. Firstly, landlords have bought more energy efficient homes where improvement works have already been done. Secondly, there has been a shift towards investors purchasing newer homes, particularly flats, built within the last decade. These properties typically carry much better EPC ratings, with almost all awarded a B or C ranking.

‘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.’

Hamptons said that as well as reducing emissions, the push for higher EPC ratings will also save tenants money, and that 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 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.