Approximately 2.9 million rental properties will need to be upgraded at a cost of £23.4bn to meet the government’s energy-efficiency goal by 2030, a report suggested.
The third Rightmove Greener Homes Report said this would equate to around £8,074 per property.
In August, the government announced it would require landlords to bring the Energy Performance Certificate (EPC) of rental homes up to a minimum rating of C.
Rightmove said that without any financial help to do this, landlords might decide to sell up rather than foot the bill for works.
According to its website, the proportion of formerly rented properties being listed for sale is at a record high, accounting for 18% of property listings, compared to 8% in 2010.
For the report, Rightmove also polled more than 14,000 homeowners and renters, including over 1,000 landlords.
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It found that half of the landlords surveyed were worried that costly charges would be introduced for those who failed to reach the government’s EPC requirements.
Meanwhile, 19% of renters felt stricter energy-efficiency rules should be a main priority for the government.
Desire to reduce energy bills
With the recent energy price cap increase expected to raise bills by 10% this winter, Rightmove’s report found that the cost of utilities was a main driver for wanting to make homes more efficient.
Its report found that 92% of renters believed it was important to understand the energy efficiency of their homes, compared to 87% of homeowners.
Further, 72% of respondents said they were prepared to change how and when they used energy if it meant they could access cheaper rates at different points in the day.
The firm’s Energy Bills Tracker found a notable difference between more and less energy-efficient homes when it came to bills.
According to Rightmove, the average energy bill for a three-bedroom semi-detached house with an EPC rating of F stands at £4,312 per year, compared with £1,681 for the same house with an EPC rating of C – a difference of £2,631.
A green wealth divide
The report found that people with higher-value properties were upgrading their homes faster.
An analysis of the EPC reports produced over the last year found that half of properties worth £1m or more had made significant improvements since the last time this was rated.
By comparison, just 32% of homes worth up to £400,000 had made notable changes to the EPC rating.
Rightmove said that with 64% of homes listed on its site being less than £400,000, it showed the mass market needed more help to make efficiency upgrades.
Assisting homeowners and landlords with energy efficiency
To help improve the sustainability of the UK’s homes, Rightmove said any policies or schemes introduced by the government needed to be carefully thought through.
It recommended designing a package of support for homeowners and landlords across the mass market, owning homes less than £400,000, to make upgrades through grants or low-interest long-term loans.
Rightmove also suggested allowing landlords to offset the costs of energy-efficient upgrades against income tax in the year costs are incurred, rather than against capital gains tax (CGT) when the property is sold.
Additionally, Rightmove proposed introducing stamp duty rebates where upgrades are made within the first few years of purchase, and encouraging mortgage lenders to continue investing in green mortgage innovations.
So far, the government has announced a Warmer Homes plan, which proposes to invest £6.6bn to upgrade homes with better insulation and low-carbon heating such as heat pumps.
Tim Bannister, director of property science at Rightmove, said: “It’s clear from our analysis that more needs to be done to help the mass market transition to greener homes, especially those living in homes worth under £400,000.
“In the rental market, through discussions with agents and our research, we know landlords want to provide comfortable, energy-efficient homes, but green upgrades can be costly. For landlords of lower-value properties, the financial returns may not always justify the investment.
“Now that the government has confirmed there will be a consultation on raising the minimum energy-efficiency standards in rental homes, we look forward to seeing much-needed clarity, and ideally support, for landlords, which in turn should benefit tenants over the medium to long term.”
Johan Svanstrom, CEO of Rightmove, said: “Our Greener Homes Report this year highlights the barriers that remain in the journey to greener homes, from the financial challenges to the need for clearer guidance on what support is available. It’s clear to us that consumers’ interest in greener options continue[s] to steadily rise.
“At Rightmove, we’ve been increasing our efforts to better educate homeowners, renters, and landlords about the cost and environmental benefits of more energy-efficient homes. By leveraging our extensive data, covering the entire property market across Great Britain, we will continue to support people in making more informed choices and equip the industry with the latest insights into homemover behaviour.”
