New research shows it could take more than 26 YEARS for landlords to earn back the cost of eco-upgrades on their rental properties.
The government wants all rental properties to have an Energy Performance Certificate (EPC) rating of C or above by 2030. This means landlords could be forced to shell out thousands of pounds to improve their properties.
Analysis by estate agent Benham and Reeves shows the average cost of upgrading a property to meet the new standard in England is £7,396!
While these upgrades will save landlords some money on energy bills – around £280 per year – it will take an average of 26.4 years to make back the initial investment.
London Landlords Face Longest Wait
Landlords in London are facing the biggest financial hit, with an average upgrade cost of £7,807. With average energy bill savings of just £247 per year, it will take 31.7 years to recoup the costs.
And don’t forget, many London properties are Grade II listed buildings. This can make it tricky and expensive to install things like double glazing.
Regional Variations
It’s not just London landlords who need to be aware of these costs. Here’s how long it will take to recoup your investment in other regions:
- East Midlands: 30.8 years
- North East: 29.8 years
- East of England: 27.0 years
- North West: 26.9 years
- South East: 25.3 years
- Yorkshire & Humber: 25.3 years
- West Midlands: 24.2 years
- South West: 22.5 years (despite having the highest average energy bill savings at £365/year)
Landlords May Exit the Market
Marc von Grundherr, director of Benham and Reeves, warns that these costs could drive landlords out of the market. He says: “Insisting that landlords make such a sizable investment…is only likely to act as another deterrent to investors.”
Higher Rents on the Horizon?
Von Grundherr also points out that landlords will likely have to pass on these costs to tenants through higher rents. This could worsen the affordability crisis in the rental market.
Before you invest in that buy-to-let, make sure you understand the true costs involved. These EPC upgrades could take decades to pay off!