Rightmove is pressing Chancellor Jeremy Hunt to seize the forthcoming Budget as a pivotal moment to provide incentives for landlords to enhance the eco-efficiency of their properties. Alongside its call for stamp duty and other reforms, Rightmove emphasizes a notable decline in landlord commitment to energy efficiency upgrades. This shift in interest is attributed to the government’s reconsideration of energy efficiency targets last year, causing a diminishing inclination among landlords to invest in upgrades for properties with lower Energy Performance Certificate (EPC) ratings.Â
As the property market continues to navigate evolving dynamics, Rightmove’s plea for fiscal incentives aims to spur a renewed focus on sustainable practices within the rental sector. The forthcoming Budget presents an opportune moment for policymakers to align economic measures with environmental objectives, encouraging landlords to contribute to a more energy-efficient and environmentally conscious housing landscape.
The portal’s research has unveiled a shift in landlord behavior towards property improvements. In 2022, 36% of landlords indicated plans to enhance properties rated below a C. However, this enthusiasm dwindled to 26% in late 2023, coinciding with the government’s decision to abandon energy efficiency targets. This shift highlights the impact of policy changes on landlord decisions regarding energy efficiency upgrades.
Recognizing this trend, Rightmove is urging Chancellor Jeremy Hunt to leverage the upcoming Budget as an opportunity to offer incentives. The proposal includes the consideration of more substantial, widely accessible grants or tax savings to motivate landlords. The goal is to not only prevent a decline in eco-friendly property enhancements but also to encourage a sustainable approach that benefits both landlords and tenants in the rental market.
Christian Balshen, Rightmove’s lettings chief, sheds light on the financial challenges faced by landlords in executing substantial energy efficiency upgrades. Limited funding options and unclear future Energy Performance Certificate regulations contribute to a decline in landlords actively pursuing greener properties.
Moreover, a lack of available and accessible funding adds to the predicament, hindering many landlords from undertaking major energy efficiency enhancements to their properties. This financial constraint coupled with the ambiguity surrounding potential future EPC regulations contributes to a decrease in landlords actively opting to make their properties more environmentally friendly.
In light of this situation, Balshen emphasizes the potential negative impact on tenants who increasingly seek energy-efficient living spaces. The call is for financial incentives that can empower landlords to enhance the energy efficiency of the UK’s private rented sector, aligning with tenant preferences for eco-friendly accommodations.
Rightmove advocates for stamp duty reform, highlighting the disproportionate impact across regions in England. The uniform zero tax charge for homes up to £250,000 for all movers and £425,000 for first-time buyers is criticized for its varying effects. In London, only four percent of homes for sale are exempt from current stamp duty charges, contrasting with the North East’s 71 percent exemption rate. Additionally, less than a third of London’s properties for sale are currently exempt from stamp duty for first-time buyers, compared to the North East’s 90 percent.
Proposing a localized approach, Rightmove suggests aligning stamp duty charges with regional property prices. This tailored strategy aims to not only support first-time buyers in entering the market but also stimulate movement up and down the property ladder.
Tim Bannister, the director of property science at the portal, highlights stamp duty as a significant hurdle to moving, deterring potential movers due to hefty tax implications. He suggests making the current changes to first-time buyer stamp duty charges permanent, considering the expiration of higher thresholds introduced in 2022. Advocating for regional variations, Bannister proposes aligning stamp duty thresholds with property price differences across regions, offering a logical step for stamp duty reform and aiding first-time buyers in more expensive parts of England.
The portal also emphasizes the need for innovation in the mortgage market, revealing that only around five percent of current mortgages have a Loan-to-Value of 95 percent or higher. Most opt for larger deposits to secure lower mortgage rates. The portal calls for new schemes supporting a broader group of prospective first-time buyers than the speculated 99 percent mortgage scheme, emphasizing the necessity for initiatives facilitating home ownership.
Matt Smith, Rightmove’s mortgage expert, acknowledges the positive trend of innovation in the mortgage product space in recent years. He highlights the intention behind these products to assist renters aspiring to become homeowners by supporting those with smaller deposits or providing access to longer-term fixed rates without a stress test.
While he recognizes the potential benefits of a 99 percent mortgage product for those with smaller deposits, Smith emphasizes the need to address the challenge of passing affordability stress tests, especially within the 4.5 loan-to-income ratio. He advocates for a balanced approach to support a broader group of future first-time buyers while ensuring robust affordability assessments.
In conclusion, Smith suggests that while the 99 percent loan-to-value mortgage can provide support for a certain demographic, more comprehensive measures are necessary to strike the right balance between assisting a larger group of future first-time buyers and maintaining stringent affordability assessments.
