Almost nine in 10 property investors are increasing spending on sustainability improvements across their portfolios according to new research that highlights the growing importance of energy efficiency in the private rented sector.
Handelsbanken’s latest Property Investor Report found that 89% of landlords and property investors plan to increase investment in sustainable property features, despite ongoing economic pressures and rising costs across the sector.
The findings suggest sustainability is increasingly being viewed as a core asset management priority rather than a standalone environmental objective.
Investors are responding to a combination of factors, including rising energy costs, changing tenant expectations, extreme weather risks and the prospect of tighter energy efficiency standards in the years ahead.
STRONGER EPCs
The report found that stronger energy performance certificates (EPCs) are now the most sought-after sustainability feature among tenants, with 66% of landlords identifying EPC C-rated properties or above as a key area of demand.
Other popular features include electric vehicle charging points (50%), smart meter and smart home technology (47%) and solar panels (43%).
The findings indicate that tenants are increasingly focused on practical sustainability measures that can reduce running costs and improve day-to-day living rather than simply seeking properties marketed as environmentally friendly.
The research also suggests that landlords continue to see a commercial benefit in making improvements.
HIGHER RENTS
More than two-thirds (68%) believe tenants are prepared to pay higher rents for greener properties, although this is down from 92% recorded in the previous report.
Handelsbanken says this may reflect the fact that energy-efficient homes are becoming an expectation rather than a premium feature in many parts of the rental market.
Regional analysis suggests demand for greener homes extends well beyond London.
Investors with properties in Wales, Scotland, the West Midlands and London were among the most likely to report tenant willingness to pay more for sustainable homes, while demand for higher EPC ratings was particularly strong in the North East, South West and London.
NET ZERO
Richard Winder, Head of Sustainability at Handelsbanken, says: “Climate change had already become a mainstream commercial consideration for property investors.
“But further energy price shocks, weather extremes and the tumbling cost of clean technologies have only made the case more compelling and urgent.
“Regulations will continue to tighten towards net zero, but it’s market demand that’s accelerating action today.”
Winder says investors are increasingly assessing how their assets will perform over the coming decade, including the impact of energy performance, resilience and insurance costs.
He adds: “For many landlords, sustainability investment is no longer just about meeting standards. It is about ensuring properties remain competitive, attractive and fit for the future.”
