From 1st April, all new rental leases and renewals of tenancies will be required to have an energy performance rating of at least E on an Energy Performance Certificate (EPC). For existing tenancies, the regulations come into force on 1st April 2020.
We wondered how much tenants are prepared to pay for energy efficiency. Properties across England and Wales let in 2017 with an energy performance rating of E achieved 3.1% more per square foot than properties let with an F or G rating. On an 800 square foot property, this equates to an average of £360 per year.
The majority of landlords are well prepared, but we calculate that around 7% of properties let in 2017 still need to be brought up to the standard required. Best prepared are London landlords where just 4.9% of properties let last year were lower than an E rating, while in the South West more than 10% of properties did not meet the standard.
At the top of the scale, properties with an A or B rating achieved, on average, 31% more per square foot than F and G rated properties in 2017. On an 800 square foot property, this equates to an average premium of £3,600 per year.
We would like to take this opportunity to thank you
for your continued support which has made 2017
such a successful year
and we look forward to working with you
in 2018 and beyond.
After months of hard work, our new website finally went live over the weekend and is looking fantastic! Why not have a good look around and see what amazing new features and information are included.
Our new banner has arrived today ready for tonight, and it looks great!! We are proudly sponsoring the Pink Wig event which is part of Falmouth Week and raises funds for vital research projects, the best care for breast cancer patients in Cornwall and a safer future for the next generation.
Tougher rules to be introduced for BTL market
Following a consultation on the Buy-to-Let market earlier this year, the Prudential Regulation Authority has now confirmed it will introduce tougher underwriting criteria, to be phased in from January next year.
The aim is to make sure that borrowers are not over-stretching themselves, and can cope with their mortgage payments as well as the other costs associated with being a landlord.
These costs could include repairs, voids and management fees. Tax liability should also be accounted for, particularly for higher rate taxpayers who will see their tax relief on mortgage interest eroded from next April.
The regulator will require that lenders consider potential increases in interest rates. As a result they will be expected to assume a minimum stress rate of 5.5%, unless the mortgage is fixed for at least 5 years.
A number of lenders have already reviewed their policies and increased their rental requirement, their stress rate, or both. More are likely to follow suit over the coming months, and ultimately this could mean that landlords won’t be able to borrow as much based on rental income.
It’s therefore important for investors to be aware of increasing costs over the coming years and account for these when planning a purchase.
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