The new build sector looks to have a bright future as the deadline for EPC requirement changes looms ever closer. With rental properties having to be rated C or above in less than three years, new build properties are expected to be an appealing option for many landlords. The upcoming restrictions are part of the government’s plan to reduce carbon emissions by 78% by 2035 and achieve net zero status by 2050. Time is running out for landlords to begin renovations on their properties to improve their energy efficiency – and many are predicted to instead look to move into the new build market due to the typically better EPC ratings of the properties.
The deadline for EPC rating requirement changes is fast approaching, and according to the Ministry of Levelling Up, Housing and Communities, there are approximately 13 million homes in England and Wales currently with an EPC rating below the proposed requirements of C or above.
Jon Cooper, head of mortgage distribution at Aldermore, says that “Buying a new build is an appealing option for many would-be buyers, something backed up by our own research, although the reasons for that are varied”.
Cooper explains that there is rarely a need to renovate or redecorate a newbuild home and coupled with lower energy bills and compliance with upcoming changes to the EPC regulations, makes for an inviting prospect for landlords and prospective homeowners alike. The on-going cost-of-living crisis is only adding to the temptation offered by the newbuild sector as people look to save on their bills wherever they can.
With the government’s new Help to Build scheme now available to buyers enabling them to build their own home with a 5% deposit, consumers may now look to building the home they want rather than trying to find one that suits their needs on the market.
Carolyn Thornley-Yates, head of mortgage proposition and distribution at Hinkley & Rugby for Intermediaries predicts that self and custom-built homes will have an important role to play in ensuring the country had adequate and diverse housing stock moving forward that can meet the government’s efficiency targets.
Despite some people within the industry voicing concerns as to what will fill the void left by the Help to Buy scheme expires in 2023, but many industry professionals expect alternatives such as private equity loan schemes to take over in that space.
“I think that lenders may also flex credit risk appetite and move to offering higher loan-to-value (LTVs) on new builds, which will be mitigated by demand for these properties given the current housing stock availability situation and the attractiveness of homes with higher EPC ratings,” Thornley-Yates said.
It appears the future of the new build space is to be one of growth. With people looking to save on bills, be compliant with energy regulations as well as becoming more aware than ever of our collective responsibility towards sustainability in general – all signs point towards new builds to become even more popular.
