Attention green-minded landlords: people selling up are missing a trick, and if you act now then their loss will be your gain

A report by Rightmove released earlier this month continues to show an alarming trend for the private rented sector (PRS); the percentage of landlords putting their properties up for sale is at a record high.

But why? And what does this mean for the future of the Buy-to-Let sector?

The estate agent’s data shows almost one in five (18%) of for-sale properties have migrated from the rental market, more than double the figure for 2010.?

Interestingly, the greatest market exit from the PRS is in London, where almost a third (29%) of for-sale homes could previously be found available for rent. For the sake of comparison, the figure for the capital is up 10 percent on the next closest, jointly the North East and Scotland on 19 percent.

There are several potential reasons for this. Costs are pricing renters out of the capital, and the search is also on for greener living, space and quieter surroundings. There are other, less obvious ones. Following the pandemic, 40 percent of tenants chose to leave the capital for properties in, predominantly, Hertfordshire, Essex and Surrey, a figure up from 28 percent a decade ago. Others may be selling up as a result of the potential Capital Gains Tax increase expected in the Autumn Statement next month.?

Any way you slice it, Rightmove’s figures provide clear evidence that landlords are selling up. But as anyone who has followed our output will tell you, selling is not your only option.

The process of developing a property through renovation, selling it for a profit or renting it out to tenants, demands a lot of time and financial investment. And while many landlords and property developers seek to reduce costs by investing only in what is required to secure tenants and bring that regular revenue onstream, this short-termism is exactly what will lead you to pull the plug on your otherwise excellent investment.

One of our recent green home renovation solutions assumed a breakeven point of six to seven years, taking into account factors such as inflation, interest rates and system depreciation/degradation. From that point on the heating solution will continue to save money for the life of the building.

As an additional bonus, the return on investment was calculated over a 25 year period. If it had been back-projected it would have generated a return of more than 40 percent a year.

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Making money is not all about all location, location, location

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Prudent property investors are able to identify cheap property in areas likely to grow in appeal, getting ahead of the curve before the demand pushes house prices up.

But location aside, a property is typically cheap because it needs to be updated and renovated through repair and refurbishment. The vast majority of landlords do not want to add to this expense with progressive energy-saving installations when they feel they can already find willing tenants.?

By factoring this investment into energy efficiency, you are making savings available to your tenants, improving the demand for your property and ultimately improving your own profits.

Properties rated EPC B and C have a market value of around five percent more than those rated D. Much of this has to do with cost savings, but there’s also much to be said for peace of mind. A warmer, more efficient home without the sense of anxiety about heating rooms or water will also improve tenants’ comfort and sense of wellbeing. A dry property drastically reduces the occurrence of damp and mould and will ultimately improve your tenants’ contentment. Reducing your tenants’ bills will also reduce the probability of arrears.

You can learn more about bill reduction (see: boost profits) here , but some of the key ways include:

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• Insulate as much as possible. Even a small amount of insulation on a Victorian house wall will make a large difference.? To learn more about the need for insulation and the cost savings that you can achieve by adopting a fabric-first approach, read here.
• Check draught-proofing on a regular basis and repair as necessary.
• Consider changing an existing gas boiler to a heat pump. To learn more about this proven technology, contact The Green Landlady and we will confirm its economic and practical viability for your specific circumstances.
• Change energy suppliers to companies that offer changeable rates depending on the time of day, for example using cheaper rate electricity for laundry or electric vehicle charging.
• Consider home electrical storage. To learn more about battery storage.
• Make the change to an electric car (see above).
• If possible, have solar photovoltaic panels installed. To learn more about the impact that solar panels can have in reducing your bills, read here.
• Use home composting as much as possible.

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Reflecting on the Rightmove report, NRLA policy director Chris Norris makes the very valid point that every rental home sold “simply exacerbates the imbalance” between supply and demand in the PRS. And despite the fact some properties will end up on the owner-occupied market, “it will be of little comfort to those households struggling to access quality housing” he says.

Let’s hope the Autumn Statement sets in place tax measures equal to the needs of UK renters. There’s money to be made, and a market in demand – but you have to be prudent. Then other landlords’ loss will be your gain, and the gain of green-minded tenants.

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At The Green Landlady, we’re focused on property development with the minimum possible negative impact on the environment. To find out how they can open the door to cost-effective energy-efficient living, to transform and protect your property or property investment plans – speak to The Green Landlady today .