A price premium can be commanded for greener rental homes, with A and B rated properties costing nearly £19,500 more on average, but landlords still need greater support to retrofit.
The findings, from The Mortgage Works, come as landlords face upcoming regulations that will force all rental properties to have an EPC rating of C or above.
This will have a 2030 deadline and The Mortgage Works is calling on the government to provide greater incentives and support for landlords who will need to pay to bring their properties up to code.
In a survey of landlords, The Mortgage Works found 16% are not willing or able to make such investments.
As a result, The Mortgage Works wants to see greater incentives to highlight the financial rationale of making these investments.
With A or B-rated properties costing 10.9% more than those that are D-rated, the most common rating, bringing an asset up to a C could add £6,200 in value.
Though smaller, this can also have an impact on rental income. Landlords of A and B-rated properties can enjoy a 7% rental income boost, which is the equivalent of £70 a month.
Properties C-rated still attract a premium of 2% and £20 a month.
These are just averages and, in terms of geography, the impacts of this are uneven across England.
In the North of England, house prices could be boosted the most by retrofitting. There, an A or B-rated property could attract a 15% premium.
At the same time, landlords in London could generate more rental income than those elsewhere in the country. In the capital, A and B-rated properties could generate rents that are 12% higher than D-rated properties.
Commenting on these findings, Dan Clinton - head of BTL at The Mortgage Works - said it would be a “hard slog” for landlords to meet the government’s “ambitious” timeline, justifying more support for the sector.
Critically, this investment needs to be highlighted as “more appealing” for landlords.
“We need the government to step up and provide the necessary support for landlords if they expect that change to happen,” said Dan. As history shows us, positive change can be painstakingly slow when there is a lack of incentives.
“Alongside this, there needs to be an effective framework for energy efficiency including clarity around the future of EPCs, information on energy efficiency improvements and skills training to ensure there is a workforce able to deliver green improvements at scale.”
