Why property investors need to know about EPCs

5 October 2023
An Energy Performance Certificate (‘EPC’) is a legally valid document that provides an energy efficiency rating for a property. Properties are rated from A-G, with A being most efficient and G being least. A property receives an EPC following an Energy Assessment Survey, conducted by a Domestic Energy Assessor. As of 2018, all properties must have at least an E rating or above to legally comply with rental requirements.

But why is this relevant to buy-to-let investors? Well, in addition to improving your environmental footstep, significant financial incentives for higher rated EPC properties are beginning to emerge. And this is set to continue.

Here’s just some of the reasons you should consider the EPC of your buy-to-let property.


Preferential Mortgage Rates

It’s becoming increasingly common for lenders to offer products with two different available rates – one for properties with a rating A-C (favourable) and one for those D and below (less favourable). As it stands, the difference between the two is at least 0.1%. In some cases, there are products that are only offered to A-C rated properties. This incentive also extends to existing mortgages, with lenders offering financial benefits to landlords that are willing to upgrade their property’s energy efficiency. Ultimately, buying a property with a higher EPC gives you more access to mortgage lenders and rates.


Future Legislation

The Net Zero Policy included a deadline for all rental properties to achieve an EPC rating of at least C by 2028. It’s worth noting that was scrapped by the PM in September 2023, which may slow the pressure for existing landlords to adhere to A-C ratings. However, EPCs have demonstrated their significance on the political agenda. Policies come and go, but climate change remains a priority and energy efficient buildings will remain central to net zero plans.


Energy Costs

As a result of the cost-of-living crisis, tenants are more mindful of energy efficiency than ever before. A higher EPC simply means lower energy consumption, which keeps costs down for tenants. In turn, properties with higher EPC ratings are both attracting and retaining more tenants than properties with lower EPC ratings. And although tenants’ awareness of energy efficiency and consumption is currently heightened, they will continue to favour properties that will save them money on bills in the future.


Shift Towards Sustainability

It boils down to a shift in mentality and lifestyle preference. The world is becoming increasingly environmentally conscious, and tenants want to feel good about where they live – both for themselves and to do their bit for the environment. A property with a higher EPC is also likely to be fitted with newer boilers, double glazed windows and need less regular maintenance, a naturally attractive prospect for tenants. So, whilst it might not be a legal requirement to achieve a higher EPC now, professional landlords with modern, energy efficient stock will be in the best position to attract long-term tenants and reduce potential voids.

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