Investor shift to purchasing properties with a higher EPC rating

Investor shift to purchasing properties with a higher EPC rating

Hi investors!
Interesting article from Hamptons talking about the overall shift to purchasing properties with a higher EPC rating
As you probably remember there is a government consultation agreement urging the government to enforce a minimum EPC C rating for any rental property.

“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.”

My overall takeaway on this:
For foreign national investors, they have to achieve a yield of at least 5.5% and ideally 6% or more.
The best properties are often older buildings with EPC D
And the data shows that just 34% of investors bought property with an EPC C rating.
This will be down to the kind of housing stock available in the North.

In reality, if the government mandate EPC C for all rented property, it will trigger a massive rental housing crisis amongst the poor, who are typically the people who occupy older build traditional terraced properties.

My guess: they will probably mandate EPC D for all existing rental properties
And probably mandate that any newly purchased properties must achieve EPC C

In any case, we have been steering you all towards properties which are built from at least 1930 onwards, that have cavity walls and can be upgraded to EPC C if necessary.

On a positive note, rents have gone up by 7% in the north of England, which is roughly 2% greater than current inflation!
And on another positive note, we are well into the last leg of the 18 year property cycle. So, if all else fails you will be able to sell your EPC D property for a profit… Which of course will trigger the massive rental crisis I spoke about earlier!

Hamptons article: https://www.hamptons.co.uk/research/articles/new-landlords-adapt-to-incoming-epc-standards#/
EPC C consultation https://www.propertymark.co.uk/resource/uk-government-sets-out-plans-to-improve-energy-efficiency.html
18 year property cycle: https://www.google.com/search?q=18+year+property+cycle
An article I wrote about the 18 year property cycle: https://nicholashgarner.medium.com/uk-18-year-property-cycle-and-the-end-of-the-long-term-debt-cycle-fb4aa4abadce