In the ever-evolving landscape of property investment, one trend has consistently proven to be a savvy choice for those looking to secure long-term returns: investing in new-build properties. The advantages of this approach are more apparent than ever, particularly when it comes to energy efficiency and cost savings.
The Growing Importance of Energy Efficiency
The UK has seen a dramatic rise in energy costs since 2021, making the efficiency of a property a critical factor for both homeowners and tenants. The disparity between energy bills in highly efficient homes versus those with poor efficiency has never been more pronounced. With energy costs at the forefront of everyone’s minds, the energy performance of a property has become a major selling point.
The average Energy Performance Certificate (EPC) rating in the UK housing market is currently a D, with ratings ranging from A (most efficient) to G (least efficient). While many existing homes have seen upgrades in recent years to improve their EPC ratings, new-build properties continue to lead the way in energy efficiency. According to the Home Builders Federation, 85% of all new-build homes achieved an EPC rating of A or B in the year leading up to March 2023, compared to just 4% of existing homes.
Why New-Builds Are Attractive to Landlords
The benefits of investing in a new-build property extend beyond energy efficiency. Studies show that tenants are increasingly prioritizing EPC ratings when searching for rental homes, with many choosing to avoid properties with lower ratings. The cost of living crisis has heightened this focus, as energy bills can be a significant burden for tenants.
Rightmove’s Greener Homes Report revealed that one in five renters now list energy efficiency as a “must-have” when looking for a new home. For landlords, this means that marketing a property with a high EPC rating can make it significantly more desirable and easier to let. In fact, a separate Rightmove study found that the primary motivation for living in a “green” home is the reduction in energy bills, with 87% of renters believing more should be done to help make homes greener.
The Financial Benefits: How Much Can You Save with a New-Build?
The potential savings on energy bills when living in a new-build are substantial. For instance, a one-bedroom flat with an A-rated EPC could have annual energy bills as low as £580. In stark contrast, a similar property with a G rating could face bills of up to £3,500 per year, a difference of £2,920.
Rightmove’s research, which factors in the latest energy price cap for April-June 2024, highlights these savings across different property types. For example:
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A two-bedroom flat with an A rating might incur average annual energy costs of £552, while a G-rated equivalent could see bills as high as £4,332.
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For a three-bedroom detached house, an A-rated property could have annual energy costs of £508, compared to £6,428 for a G-rated home.
These figures clearly illustrate the financial advantages of choosing a new-build, where properties largely fall into the A or B EPC categories.
The UK’s Energy Efficiency Challenge: 18 Million Homes in Need of Upgrades
Despite the clear benefits of energy-efficient homes, a staggering 18 million homes in the UK still fall short of optimal energy efficiency standards. While new-build properties continue to set the standard, there is a significant need for existing properties to be upgraded.
Tim Bannister, a property expert at Rightmove, emphasizes the importance of this issue: “There’s a big job to be done to address the widescale issue that at least 18 million UK homes need to be improved. Many homeowners and landlords need urgent access to schemes that enable them to make these improvements, which could help with huge savings on energy bills.”
Nathan Emerson, CEO of Propertymark, adds: “Propertymark has long supported initiatives and practical measures to help enhance energy efficiency across the UK. It’s vital there is a diverse approach of funding, grants, and targeted schemes to assist with upgrades.”
Invest in New-Build Opportunities
If you’re a property investor looking for a way to future-proof your portfolio, investing in a new-build property could be the ideal solution. With significant savings on energy bills and increased desirability among tenants, new-builds offer a compelling investment opportunity.
Whether you’re interested in off-plan developments or completed properties in one of the UK’s top-performing locations, we are here to help. Get in touch with us today to explore the best new-build investment opportunities available.
