Recent research conducted by The Mortgage Lender (TML) has unveiled that energy efficiency is increasingly becoming a key factor for landlords when considering new investments in the property market. This shift in priorities comes amidst other significant considerations such as mortgage rates, yields, and property location.
Energy Efficiency Gains Traction Among Landlords
The survey by TML highlighted that a notable 25% of landlords now rank energy efficiency as a priority when selecting new properties to invest in. This is closely followed by the 29% who consider rental yield a primary concern. This trend emerges even after the government’s decision to extend the deadline for meeting enhanced energy efficiency standards in buy-to-let (BTL) properties to 2028, suggesting a proactive approach from landlords towards embracing sustainable practices.
A Broader Perspective on Investment Criteria
In addition to energy efficiency, landlords are weighing multiple factors in their investment decisions. Price remains a dominant consideration for nearly half of the respondents (48%), with the long-term investment potential of a property also playing a crucial role for 23% of landlords. Other influential aspects include the attractiveness of the property’s location (29%), favourable council tax banding (17%), the readiness of the property for immediate occupation (16%), and the interior layout (16%).
Investment Strategies and Mortgage Importance
When it comes to the specifics of investment approaches, 24% of landlords expressed a preference for purchasing properties as individual investors with a mortgage. Conversely, a smaller fraction, only 10%, indicated plans to invest through a limited company with a mortgage, and 11% aim to co-invest with a partner, utilising a loan. The interest rate on the mortgage emerged as a critical factor for a significant majority (77%) of landlords, underlining the importance of financial considerations in their investment strategies.
Chris Kirby of The Mortgage Lender reflected on the findings, stating, “It’s encouraging to see that BTL landlords are continuing to adapt and shift their priorities, even though the Government postponed the planned introduction of Energy Efficiency standards for properties in the Private Rental Sector.” He further added, “It shows just how committed many landlords are to staying ahead of the curve and anticipating tenant expectations.”
This research not only sheds light on the evolving priorities of landlords in the dynamic property investment landscape but also signals a growing recognition of the importance of energy efficiency in the rental market.
