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The Government’s ‘Plan for Change’ requires all properties rented in England to achieve an EPC rating of a C or above by 2030. The timeframe on this deadline means that buy-to-let investors need to devise a plan for how their properties can hit these targets – and fast. One of the best ways to meet EPC requirements is to invest in new-build homes, which are the most energy efficient housing stock in the UK, with the majority achieving energy ratings of A or B.
New Builds and EPC Requirements.
New build homes are an appealing proposition for buy-to-let investors who want to avoid the time and expense of upgrading an old, inefficient home to meet EPC requirements. Many necessary renovations will not be possible while the home is occupied, meaning that the investor will lose income while the renovations take place. Because of this, some investors might prefer to sell their properties and invest in an energy efficient new build, which will be a much more future-proof investment.
On average, new build homes emit 65% less carbon than older properties each year with 86% of brand-new homes achieving an EPC rating of A or B. Compared with older housing stock, only 5% of which achieves top EPC ratings, it’s easy to see why many UK expat and foreign national investors are considering new build homes. The energy efficiency of these new builds also appeals to tenants, whose running costs will be substantially lower in a brand-new property compared with an older one.
There are further positives to new builds not associated with their energy efficiency too. Firstly, new build properties have 10-year warranties meaning anything that goes wrong with the property will be guaranteed by the developer, reducing the risk of UK expat and foreign national landlords incurring high maintenance costs. The build standards of new builds are also better, mitigating the risks of necessary renovation work long into the future. And many new builds come with attractive on-site amenities like gyms, concierges and car parking, which can go a long way in attracting tenants.
To Renovate or Not?
‘The question of whether to renovate or buy a new build will depend on many factors’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘Some homes might achieve the minimum standards fairly easily, while other homes will never achieve them. For the latter, the owner must prove they have spent up to a particular threshold to improve the property and then apply for an exemption in order to rent it to tenants. This could be very costly for some investors, with the National Residential Landlords Association estimating costs of up to £15,000 necessary to reach the exemption threshold. For those investors, it could be worthwhile reassessing their portfolios, selling inefficient homes and investing in new-build properties to ensure compliance. For those who face lower costs to meet compliance, it will be more about personal choice. However, it’s undeniable that new build investments will be far more future proof.’
Long-Term New Build Prospects.
UK expat and foreign national investors who invest in new build properties stand to benefit hugely in the long term. UK property is a tried and tested method of investment with great returns over a long period. However, maximising returns requires some agility and forward thinking to adjust to legislative and regulatory changes. And investing in a new build property is one way of being agile in a competitive rental market. For UK expat and foreign national investors who do decide to change the makeup of their portfolio, the returns are likely to be worthwhile. A recent report showed that lenders are more likely to favour resilient portfolios when deciding who to give money to. Inefficient properties with high carbon footprints are risky for mortgage security and asset value, meaning lenders will want to mitigate their risk as much as possible. On the other hand, new build properties represent an attractive proposition for lenders, and this makes them highly mortgageable – something that is hugely valuable for UK expat and foreign national investors looking to utilise the range of specialist mortgage products available.
The long-term capital growth potential of efficient homes is also a good reason to buy a new build home. Homes with an EPC rating of A-C are 4.7% less likely to have their asking prices reduced compared to less efficient properties. They are also increasing at an average rate of 2.6% in their sales value and receiving a higher percentage of their initial asking price.
With 2.5 million rented homes between a D and a G, it’s inevitable that there will be many homes removed from the rental market in the midst of the EPC compliance changes. This means that for UK expat and foreign national investors who do have buy-to-let properties in the UK rental market, demand and competition will be strong and, as a result, rental yields will remain high. With the mortgageability of new build properties, UK expat and foreign national investors stand to benefit from the general prospects of new build property investment alongside the range of incredible specialist mortgage deals available through expert brokers.
Liquid Expat Mortgages
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Todd Hall Rd,
Haslingden, Rossendale
BB4 5HU
Phone: 0161 871 1216
www.liquidexpatmortgages.com
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Disclaimer:
The content of this article is provided for informational and illustrative purposes only and is not intended as financial, legal, or tax advice. Liquid Expat Mortgages is authorised and regulated by the Financial Conduct Authority (FCA) to provide mortgage and protection advice. However, the FCA does not regulate certain investment mortgage contracts, and any views expressed herein may include unconventional or contrarian perspectives that do not necessarily reflect standard industry practices or regulatory guidance. Your home or property may be repossessed if you fail to keep up repayments on a mortgage or any other debt secured against it. We are not authorised to provide legal or tax advice, and we strongly recommend consulting a qualified professional for personalised guidance tailored to your circumstances before making any financial decisions.
