In the dynamic landscape of the rental market, staying informed about emerging trends and shifts in landlord responsibilities is crucial.
In this edition of the Landlord Library, we delve into three key trends impacting landlords across the UK: Energy Performance Certificates (EPC), parking space requirements, and the lengthening of tenancies.
Each of these trends carries its own set of implications and considerations for both landlords and tenants.
Let’s explore how these trends are shaping the rental market and the strategies landlords can employ to navigate them successfully.
1. The EPC requirements have been put on hold
Energy Performance Certificates (EPCs) are ratings that show how energy efficient a property is. Several factors influence a property’s EPC rating, such as its age, construction type, and installed energy-saving measures.
Older properties tend to be less energy-efficient due to possible insulation shortcomings and less efficient heating systems.
The UK government aimed to raise the EPC ratings of all homes in England and Wales to band C or higher, which requires significant efforts to enhance the energy efficiency of the country’s housing as the average is currently at band D.
The EPC requirement was due to come into force in 2025 for all new tenancies and in 2028 for all existing tenancies.
In September 2023, the government announced that it is scrapping the requirement for rental properties to have an Energy Performance Certificate (EPC) rating of C or above.
The announcement made by Prime Minister Rishi Sunak mentioned that the EPC requirement was “unfair” on landlords and would have made it harder for people to afford to rent a home.
However, a report from Shawbrook indicates that 80% of landlords have already readied themselves for the deadline.
Overall, the cancellation of the 2025 EPC deadline does not mean that EPC ratings are no longer important. EPC ratings are still a valuable tool for landlords when choosing a property, and they can also help to reduce running costs.
Landlords should still consider the EPC rating of a property when choosing a place to rent. Properties with high EPC ratings will be more energy efficient and will cost less to run. Landlords should also consider investing in energy efficiency upgrades, even though there is no longer a deadline. This will help them to attract tenants and reduce their running costs.
2. Parking is becoming less of a requirement for tenants
In an effort to reduce carbon emissions in major cities, a series of environmentally conscious policies have been put into action.
These policies involve the implementation of charges for car owners, especially those with high carbon-emitting vehicles, when driving in designated zones.
Additionally, parking fees have seen an increase in urban areas where space is limited. Furthermore, the rise in energy prices due to political tensions in Europe has led to an increase in gas costs.
As a result, owning a vehicle in densely populated UK cities has become increasingly unaffordable. Given the easy accessibility of public transportation, many tenants are opting not to invest in their own cars.
For landlords, there may be an opportunity to repurpose parking spaces for alternative uses, such as residential units, commercial areas, or green spaces.
This strategic move has the potential to enhance the long-term value of their properties. Landlords who can adapt to the evolving needs of their tenants are likely to achieve greater success in the long run.
3. Tenants are opting for longer leases
A new trend in the UK rental market, driven by increased competition, involves tenants opting for longer leases of 2+ years instead of the traditional 6-month to 1-year agreements. Securing a rental apartment in major UK cities has become exceptionally challenging due to surging demand, a trend echoed in Complete’s void periods which have experienced an all-time low.
With mortgage rates on the rise, more individuals are expected to enter the rental market, suggesting that this trend will persist.
This shift offers numerous advantages, particularly for landlords, which are outlined below:
- Reduced turnover costs: Landlords with longer tenancies will have fewer void periods, which means they will save money on turnover costs, such as marketing and referencing.
- More stable rental income: longer tenancies provide landlords with a more stable rental income, which can help them to budget and plan.
- Stronger relationships with tenants: Landlords who have longer relationships with their tenants are more likely to develop strong relationships with them. This can lead to several benefits, such as reduced wear and tear on the property and a willingness to resolve any issues quickly and amicably.
After looking at the current rental market trends, it’s evident that landlords face an evolving landscape filled with both challenges and opportunities.
The shift in EPC deadlines, reduced parking space demand, and the trend toward longer tenancies all require landlords to adapt and make informed decisions.
While there may be uncertainties and adjustments to be made, one thing remains clear: the importance of staying attuned to the ever-changing dynamics of the rental market.
By doing so, landlords can position themselves to not only meet the evolving needs of their tenants but also enhance the overall sustainability and profitability of their property investments.
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