The Value Of Investing In Energy Efficient Properties

Investing in properties that are already energy efficient, or have a potential to become energy efficient, is becoming increasingly important.

Investors looking to expand their portfolio should consider the significant regulations that are already coming into place, stressing the importance of eco-friendly homes.

An important part of investment is longevity, and it is becoming increasingly clear that to sustain passive income in the long term it’s best to ensure that homes are energy efficient sooner rather than later.

Whether that is through improving heat retention, or investing in renewable energy sources it is worth working energy efficiency into your investment strategy moving forward.

Consider some of the benefits:

Incentivise tenants with lower utility costs

Whether it’s solar panels or heat pumps, renewable energy can be cheaper to run compared to traditional utilities.

This lower running cost could attract tenants, meaning that you will not struggle to fill the property.

Similarly, a well insulated home is more likely to sustain tenants, and lead to reduced turnover in the winter months where some may be looking for somewhere that traps the heat more effectively.

Many people in the rental market also trend younger, and so naturally would want to live in an energy efficient home which leverages sustainable energy where possible.

You can use this as an additional selling point when putting the property on the market to attract good prospective leads.

Mitigation of future works

Environmental policy worldwide is putting more restrictions on landlords to ensure homes meet environmental requirements.

For example, the UK is introducing a deadline to meet an environmental score (called an EPC rating) of C.

The closer to the deadlines, the more expensive upgrades and repairs may become, so to mitigate costly future works, investors should consider taking action now.

Whether that is installing solar panels, or windows that are more airtight, it is likely that waiting until the last minute would prove much more costly.

You can get government help

Various government grants are available to help cover the cost of installing energy efficient appliances like heat pumps in your property.

For example, as part of the UK’s commitment to achieving Net Zero by 2050, there are a range of grants and loans offered to assist with the purchase and installation of heat pumps.

In England and Wales the “Boiler Upgrade Scheme” offers homeowners £5,000 towards the cost of installing an air source heat pump.

In Scotland homeowners can apply for a £7,500 grant through Home Energy Scotland for the installation of an air source heat pump. Those living in rural areas may be eligible for an extra £1,500 top-up.

Higher resale value

Similar to attracting more tenants, people will be more likely to buy homes knowing that they have lower running costs.

To use the UK as an example again, EPC ratings are included on home reports and factor into their valuation.

So investing in energy efficient homes, as well as lowering running costs for tenants and helping you avoid costly upgrades, will allow you to factor in increased value as part of an exit strategy.