Light refurbishment is a common way for property investors to increase their returns. Buying a run-down property, fitting a new kitchen and bathroom, changing the flooring and redecorating are relatively low-risk ways to increase the rental and capital value. But what else can an investor do to make sure they are maximising the property’s potential?
Taking steps to make a property more energy efficient can increase its value by up to 13%, according to analysis by comparethemarket.com. The report found that homes with a higher rating on their Energy Performance Certificate (EPC) are worth more in all areas of the UK other than London and the South East, where any value uplift is negligible given that house prices are so high in this region. However, in the North East, houses with an A/B EPC rating are worth 13% more than those with a D rating, and in the Cotswolds an A/B EPC rating can add 8%. With research from the Mayor of London showing that one in seven Londoners wish to move out of London following the Covid crisis, improving the EPC level could be a cost-effective way to increase the rental or capital value of these properties.
An EPC certificate will rate a property from A to G based on how energy efficient it is and as of 1 April 2018, all private rental properties in the UK must have an Energy Performance Certificate with a minimum rating of E. The best ways of improving the rating, and the value of the property, are increasing loft insulation, adding double glazing, adding cavity wall insulation and draught proofing.
Taking steps like these can be a cost effective, and green, way for property investors to add value to their investment, and for investors who are quick, there is even the potential to secure a grant to help with the costs.
The Green Homes Grant provides a voucher that will cover two-thirds of the cost of eligible improvements to a property up to a maximum government contribution of £5,000. It’s available to landlords as well as residential homeowners, but the current scheme requires that vouchers must be redeemed and improvements completed by 31 March 2021.
With or without the grant, the energy efficiency of a property should be a consideration as part of any refurb project. Not only will it help the environment, it will help to make the property more attractive to potential tenants or purchasers, and tenants will realise an ongoing benefit in the form of lower energy bills.
For investors who are considering a property refurbishment, a product like Bridge to Let offers the upfront flexibility to enable the works to be carried out, with the peace of mind of a guaranteed exit once they are completed and the property is ready for tenants.
With Bridge to Let the two funding facilities can be approved with one application process, which means no doubling up of work and no extra costs or delays. So, on a project like this, it’s not just the property that can become more efficient, but also the funding process.