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The energy efficiency of homes is once again at the forefront of renters’ minds, with energy prices rising 10% this October and property portal, Rightmove, calling for an increase in the numbers of green uk investment property investment and support in the energy efficient property sector more generally.
Why Are Energy Efficiency and Green UK Investment Property Back in the Spotlight?
October 1st sees another rise in energy prices in the UK after Ofgem, the UK’s energy regulator, decided to increase the energy price cap by 10%. The rise is another blow to renters who are struggling with high rental prices in a hot rental market, bringing the typical annual dual-fuel bill to £1717 per year. This is an average rise of £149 per household. Because of the strain of higher energy bills, increasing numbers of renters are on the hunt for more energy-efficient rental properties.
Invest in Flats.
UK Expat and foreign national investors need to take note of how the cost of energy is affecting renter behaviours in the market. ‘There has been a recent trend in the rental market towards more energy efficient properties’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘Renters are feeling the squeeze of a heightened cost of living, high rents and higher energy prices and this is causing renters to seek out smaller, more energy efficient properties. It is this search for lower energy costs that has led to the popularity of city centre flats in the recent past. These properties are highly desirable for renters and that has pushed up the asking prices for rents. It’s not surprising, given that flats and one-bedroom houses have an approximate annual energy cost of £1247 compared to a 2-3-bedroom house which has an annual cost of £1717. The significant saving presented by these properties is very attractive to renters and can create a desirable and in-demand property.’
‘Further, in many cases, flats are far more affordable than houses and are commanding similar rents at the moment because of the demand for them. Because of this relative affordability, UK expat and foreign national investors are able to extract better yields from these properties. The high demand means that there are also shorter void periods and longer tenancies, as renters choose to stay put in a turbulent market. The accessibility of specialist UK expat and foreign national mortgage products is also helping investors to buy a number of smaller, more energy efficient properties instead of just one older, character property. These newer, more efficient properties are highly mortgageable and a great candidate for using specialist mortgage products with the help of an expert broker.’
Re-Mortgage for Green Renovations.
‘One other common discussion that Liquid Expat Mortgages have been having with customers is to discuss how re-mortgages can be used to satisfy some of the consumer demand for green property. There are two main ways that re-mortgages can be used to increase the numbers of green properties available: through using the property’s equity to conduct green renovations and using the equity in the property to purchase a newer, greener property. Both of these options can be incredibly lucrative and a great choice depending on the investor’s intentions.’
‘There are many incentives for investors to utilise re-mortgage products to conduct green renovations. Firstly, utilising existing equity to add value and desirability to a property is a great way for UK expat and foreign national investors to get the most out of their asset. This can increase rental yields because an efficient property will be more popular for renters and maximise asking prices for rents. It will also increase the capital growth potential of the property as a property with a better energy rating is likely to be more popular for would-be buyers and will command a better price when the investor comes to sell. There are also many different schemes which are intended to minimise the cost of green renovations so that more homeowners are incentivised to make their property more energy efficient.’
‘For more experienced investors, however, using a re-mortgage product to raise capital which can buy another, more efficient property could be a gamechanger for portfolio growth. There are certainly deals to be had on newer, more efficient properties. This is especially true for investors who are willing to buy off-plan. And these properties are highly mortgageable too. For investors who have owned their existing investment property for a while and have built up a lot of equity in that property, using some of that equity to get a mortgage on a newer property will double their profits and add a lot of value to their portfolio. The high price of rents and the quality of specialist UK expat and foreign national mortgage products at the moment means that rental charges are likely to exceed mortgage payments so investors will be seeing profit from day one. Expert mortgage brokers like Liquid Expat Mortgages are able to help with this and ensure the best deal for investors.’
Green Mortgage Deals.
‘It’s worth noting as well that one major incentive to invest in greener property is the potential access to green mortgage deals. Many lenders are offering cash incentives, discounts and preferential rates for investors who make their property more energy efficient. Some specialist lenders have specific products with preferential rates for investors who have an efficient property or renovate an existing property to make it greener. These deals can mean massive savings and increased profits for UK expat and foreign national investors, especially those with smaller, more efficient properties.’
Liquid Expat Mortgages
Suite 4b, Link 665 Business Centre,
Todd Hall Rd,
Haslingden, Rossendale
BB4 5HU
Phone: 0161 871 1216
www.liquidexpatmortgages.com
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