introduction
UK real estate investors are bracing for tougher times ahead as new energy efficiency regulations combine with the rising costs of inflation and energy prices to create financial headwinds. The Labour government's recent confirmation that all rental properties must meet a minimum Energy Performance Certificate (EPC) rating of Band C by 2030 has stirred concerns across the real estate investment sector.
Investment opportunities
UK real estate investors are bracing for tougher times ahead as new energy efficiency regulations, inflation, and rising energy prices create financial headwinds. The Labour government's recent confirmation that all rental properties must meet a minimum Energy Performance Certificate (EPC) rating of Band C by 2030 has stirred concerns across the sector. But amidst these challenges, one solution stands out: buying new build properties that are already EPC compliant.
Investment Opportunities with a Clear Path to Compliance
According to a survey conducted by Finbri, 76% of UK real estate investors are increasingly worried about the escalating costs associated with inflation, while 71% are equally concerned about rising energy prices. These dual pressures place real estate investors, particularly those with multiple properties, in a challenging position as they prepare to comply with the new EPC standards. But for those considering new build properties, these concerns can be mitigated, as new constructions are designed with energy efficiency in mind and typically meet the required EPC Band C or higher right from the start.
Why New Builds Are a Solution to EPC Compliance
New build properties often come with high energy efficiency standards, making them a smart investment choice for those looking to avoid the financial strain of upgrading older properties. By investing in new builds, real estate investors can sidestep the average £10,000 cost per property needed to bring existing homes up to EPC Band C. This provides an immediate solution to the looming regulatory changes, protecting investors from potential fines and restrictions on renting non-compliant properties.
The Financial Strain of Meeting New EPC Requirements in the Buy-to-Let Market
While the government’s EPC regulations aim to reduce carbon emissions and lower tenant energy costs, they place a significant burden on landlords, especially those in the buy-to-let market. Inflation is driving up the cost of energy efficiency upgrades, making compliance a costly endeavor. However, by purchasing new builds, investors can ensure their properties are already compliant, saving time, money, and effort in the long run.
Stephen Clark from Finbri bridging finance notes: "While there's general agreement on the need to make properties more energy-efficient, the new EPC rules are adding significant financial strain on smaller landlords within the private rented sector. New build properties offer a practical solution, as they are already constructed to meet these efficiency standards."
Energy Price Increases Add to Landlord and Tenant Worries
Energy price hikes are another concern for landlords and tenants alike. Finbri’s survey found that 71% of investors are worried about the impact of rising energy prices on their investments. However, with new build properties, landlords can offer energy-efficient homes that appeal to tenants looking to reduce their energy bills.
conclusion
For real estate investors navigating the challenging landscape of new EPC regulations, inflation, and energy price increases, purchasing new build properties offers a clear and efficient solution. These homes are already built to meet or exceed the upcoming energy efficiency standards, allowing investors to avoid costly upgrades and ensure compliance by 2030. Investing in new builds not only future-proofs your portfolio but also appeals to energy-conscious tenants, making it a win-win strategy in today’s real estate market.
