A recent survey shows 77% of buy-to-let landlords invest in upgrades on their property after purchasing it. This is further improving standards in the private rented sector.
Paragon Bank’s new report highlights how the standards of properties in the private rented sector have changed over the past decade. The bank also surveyed approximately 900 landlords. The results revealed nearly four in five (77%) of landlords are prioritising upgrades to their properties before tenants move in.
On average, landlords spent £8,720 each on upgrades. This collective spending would equate to £839m annual investment based on the average number of buy-to-let mortgages permitted every year since 2015. Buy-to-let landlords are driving improvement in the sector by upgrading newly purchased properties before renting it out to tenants.
Richard Rowntree, managing director of mortgages at Paragon Bank, says: “Landlords typically will make significant improvements to a property before letting to tenants, helping to improve standards across the private rented sector.
“Landlords will of course benefit from this investment through capital appreciation, but it always results in better quality homes for tenants.”
Most common upgrades
The most common work done is general maintenance and painting with 67% of buy-to-let landlords undertaking this work. Electric or plumbing work and laying new flooring followed with 44% and 37% respectively.
Additionally, about a third of landlords, or 32%, install a new bathroom or kitchen. And nearly a quarter install a new boiler with 24% and upgrade windows with 23%.
Over the past decade, the quality of housing stock in the private rented sector has improved significantly. On top of that, the types of properties available have expanded, providing tenants with more choice.
Richard Rowntree comments: “There is a clear correlation between buy-to-let investment and improving standards in the quality of private rental homes. Standards of property in the PRS have increased significantly over that period.
“Overall homes in the sector are newer, larger, warmer and more energy efficient than they were 10 years ago and tenants have more choice.”
About three quarters of homes in the private rented sector are now classed as decent. This is compared to less than half in 2006 but needs to be improved further. However, it’s good to see the strides hundreds of thousands of landlords are making and providing their tenants with quality homes.
Additionally, the number of homes built after 1990 in the sector has increased by 100%. Landlords have been adding more modern properties, which come with many benefits for tenants and landlords, to their property portfolios.
More energy efficient properties
There have been significant improvements to the energy efficiency of the private rented sector in the past 10 years. The energy efficiency of homes in the sector even outperforms the owner-occupied market.
Since 2009, the number of homes in the private rented sector with an EPC rating of C or above increased by an impressive 272%. This equates to 1.8m properties. On the other hand, the proportion of homes with an EPC rating of E or below sits at 14.8%. This is much lower than 50.1% in 2009.
The government has a goal of making the housing stock in the UK carbon neutral by 2050. More energy efficiency improvements should be made to improve the sector even more.
Under government proposals, all new properties being let for new tenancies in the private rental market could be required to have an EPC rating of at least C by April 2025. This may lead to more landlords investing in energy efficient new-builds. This would further improve the quality of housing in the private rented sector.