Green retrofitting ‘can improve property values and rental yields for landlords’
A recent study conducted by The Mortgage Works suggests that energy-efficient properties can command significant price premiums. In England, a buy-to-let property with an A or B energy rating could potentially attract a price premium of 10.9%, equivalent to £19,500 in cash terms, compared to a property with a D rating if a landlord decides to sell. The analysis also indicates that improving a property to a C rating could result in a 3.4% premium, amounting to £6,200 for landlords in England.
Not only could green retrofitting impact property prices, but it could also lead to higher rental yields for landlords. Properties with A and B energy ratings could see a rental income boost of 7%, which translates to around £70 per month based on the average rent in England. Similarly, properties with a C rating could attract a rental premium of 2%, or £20 per month.
Dan Clinton, head of buy-to-let at The Mortgage Works, emphasised the long-term benefits of green retrofitting in terms of increased property value and improved rental yields. However, he acknowledged the challenges that landlords may face in upgrading their properties, particularly amid rising mortgage rates and tax bills. Clinton stressed the importance of incentivising landlords to invest in their properties to make them more appealing.
The findings highlight the potential financial gains that landlords could achieve by embracing energy-efficient measures in their properties. By taking action now to enhance the energy performance of rental properties, landlords not only stand to boost their property values but also increase their rental income, ultimately creating a win-win situation for both landlords and tenants.