Over nine in 10 (92 per cent) property investors have received requests from tenants for some form of sustainable feature in the past 12 months, research from Handelsbanken has revealed.
The research, which surveyed UK property investors with an average of 35 properties each, found the vast majority reported tenants asking for features such as heat pumps, solar generation, or EV chargers.
Furthermore, 58 per cent of tenants have requested properties with an Energy Performance Certificate rating of C.
This rises to 88 per cent of tenants in London amid high energy costs.
Handelsbanken Milton Keynes branch manager, Lisa Robey, said: “Our customers are seeing tremendous growth demand from tenants for sustainable properties that can help reduce both their environmental footprint and their utility bills.
“It’s important to note that landlords who invest in green features are not only meeting this demand, but also future-proofing their assets.”
Handelsbanken pointed out that current government regulations in England require all residential and commercial rental properties to have an EPC rating of E or above before being let to tenants.
Previous plans to raise the minimum EPC rating to C for existing residential rentals by 2028 were scrapped in September of last year.
The research found that, while a quarter of respondents have cut the amount they planned to invest following this announcement, a substantial proportion (44 per cent) are continuing with their original investment plans.
It added that, with tenant appetite for sustainable properties at an all-time high, it comes as “little surprise” that the average value of annual budgets earmarked for sustainable investments across commercial and residential properties has risen.
The research found these annual budgets have increased from £106,222, which was reported in Handelsbanken’s 2023 report, to £128,000 this year – an increase of over 20 per cent.
The findings also showed that landlords are embracing the drive for sustainable assets beyond their purse strings, and would welcome changes from the government at a legislative level.
Some 72 per cent of respondents said they would welcome new rules raising the minimum EPC rating to A for commercial and residential lettings – the highest level achievable.
Handelsbanken UK head of sustainability, Richard Winder, said: “Property investors are clearly recognising the long-term value of maximising energy efficiency across their portfolios.
“They also seem to be eager to meet the highest sustainability standards to capitalise on the commercial benefits.
“Locking in value, reducing operating costs, and attracting and retaining tenants are all front of mind for investors – research suggests that assets with the highest EPC ratings enjoy considerably longer lease lengths.”
tom.dunstan@ft.com
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