BTL properties under EPC band C ‘becoming harder to sell’

More than seven in 10 landlords (71%) say they are unlikely to buy a property which has an EPC rating of less than C, latest BVA BDRC landlord research reveals.

Asked to what extent the EPC rating of a property now impacted on their purchasing decision, the vast majority of respondents said they were increasingly unlikely to purchase a rental property if it wasn’t already at a C level.

NO DIFFERENCE

The more properties the landlord had within their portfolio, the less likely they were to buy below C, with three quarters (74%) of those with six to 10 and 11-19 properties, saying this, and eight out of 10 (78%) of those with over 20 properties. Around a fifth (18%) of landlords said the EPC level would make no difference.

In terms of the work landlords intended to carry out on below-Level C properties, four out of 10 (37%) said they would carry out the works at the minimum cost required to comply while nearly one in five (20%) said they would carry out works to maximise the long-term value of their property. However, a quarter said they would not carry out any works and would either sell the property or not re-let it.

The BVA BDRC research, comprised of 983 online interviews with landlords, was undertaken on behalf of buy-to-let lender Foundation Home Loans.

EXISTING PORTFOLIOS

Grant Hendry at Foundation Home Loans, says: “It’s clear from this research that landlords are aware of what is likely to be coming and are thinking seriously about their existing portfolios.

“Effectively, landlords are future-proofing their portfolios by opting only to buy C and above properties now, while they will presumably focus on those properties within their portfolio which are not currently at this level.”

And he adds: “There are clearly mortgage pricing incentives to be accessed for properties which are already at EPC C and as we move into the future, landlords are likely to see this as a further incentive to ensure the property is above C.”