'Bills included' landlords could boost profits with energy tweaks

Landlords offering 'bills included' tenancies could boost their profit margin significantly by taking a proactive approach to improving their EPC ratings, new analysis from energy efficiency platform epIMS has demonstrated.

Related topics:  Landlords,  Energy Efficiency
Amy Loddington | Online Editor, Financial Reporter
23rd December 2024
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The analysis of current rental market listings by epIMS shows that 14% of all current rental properties on the market offer the cost of bills included within the monthly asking rent.

This number of rental properties offering bills included within the asking rent has increased by 57% in the last year alone when just 12% of all rental market listings came with the cost of bills included.

Further research by epIMS shows that, for those landlords offering a bills included rental, improving the energy efficiency of their property could see them dramatically increase their profit margins.

As per new government guidelines, landlords will also be required to hold a mandatory rating of C by 2030 anyway and so making improvements now helps them get ahead of this compliance requirement.

epIMS analysed the current average energy bill for each property type based on its EPC rating and how the cost required to power a rental property differs based on its energy efficiency.

The figures show that the average property with EPC D rating has an average energy bill of £2,513. By upgrading to a C, it would reduce this cost by 29% or £717 per year.

Upgrading from an E rating to a C would cut the average energy bill of a property by 48% or £1,685 per year.

The average landlord with a F rated property could reduce the average energy bill by 61% or £2,838 per year.

For those with the worst rated EPC rating of G, improving their property to just a C rating would see them save a huge £4,240 per year, cutting their energy bill by 70% - a potential saving of over £21,000 over the next five years.

COO of epIMS, Craig Cooper, commented:

“Landlords have been hit by a string of legislative changes designed to dent the profit margins of their buy-to-let portfolio, not least the recent hike to second home stamp duty costs, so they can be forgiven for viewing the mandatory EPC C rating as yet another layer of unnecessary red tape to adhere to by 2030.

"However, with more and more landlords offering the cost of bills included within their asking rents, making EPC improvements now could see them boost their profit margins, as they could dramatically reduce the energy costs associated with their property.

"The good news is that you don’t need to completely overhaul your property to achieve an EPC C rating and we regularly find that it can be accomplished with one or two minor adjustments, rather than the radical changes often touted by the government.”

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