North-west landlords committed to energy efficiency, finds Handelsbanken

Almost a quarter of landlords in the North-west plan to spend £200,000 to £500,000 to improve the energy efficiency of their portfolio, according to new research from relationship bank Handelsbanken.

Polled for the bank’s second Professional Landlords Survey, 24% of them said they’re planning to spend the money to improve energy efficiency ratings of properties, with a further 12% looking to spend over £750,000. Nationally, most landlords plan to spend between £100,000 and £200,000.

With prices still volatile, energy costs will factor into tenants’ calculations when deciding where to live, something that landlords will be mindful of. They may also be looking to get ahead of any future changes to the regulations and making the investment sooner rather than later.

Landlords in the survey had an average of 29 properties worth a value of £14 million and were drawn from across the UK.

The survey also found many landlords in the North-west in bullish mood, with 59% planning to increase the size of their portfolio in the next year. These landlords were particularly interested in boosting the amount of student or house share accommodation they owned, while 47% were keen to invest more in commercial retail units.

Nationally, over half (57%) of those looking to buy more properties also plan to diversify into new sectors, with offices (43%) attracting the most interest as investors.

The overwhelming majority of respondents (92%) expect the value of their portfolio to increase over the next 12 months, with 39% predicting it will grow by over 20%. Only 8% thought it would broadly stay the same.

The report highlights that professional property investors are cautiously optimistic and alert to opportunities but mindful of a sensitive market. Many are waiting for values to fall a little further, like for offices and commercial assets, (a general market prospect being forecast by the Bank).

Alan Bowers, North West and North Wales District Head at Handelsbanken said:

“Energy prices are becoming a factor for tenants and this survey shows many landlords inthe North West are alert to that and to the importance of future-proofing their properties as regulations look set to change around Energy Performance Certificates.

“Despite volatility in the property sector, it’s also encouraging to see that property investors in the North West are being pragmatic yet entrepreneurial. They are showing caution but are equally sensitive to the opportunities available in the current environment and are aware of the investment needed to make these energy efficiency improvements.”

Landlords were also asked which regions they think are the most attractive for property investors in the next 12 months. Naturally, the North West’s landlords thought their home region presented an attractive investment opportunity, with London their second choice.