Property investors deciding on property size may want to consider flats over houses as people increasingly look at ways they can save on their energy costs.
Rising rents for certain property types in particular locations can often be an indication of what is rising and what is falling in the popularity stakes, and it’s already been reported earlier this year that city centre flats are becoming increasingly competitive.
Now some new research from property maintenance solution provider Help Me Fix has revealed how much energy bills are rising in certain property types, and how much money some households are saving by downsizing.
While the report focuses on homeowners, it is a reflection of what tenants could also save on their bills, and is something that buy-to-let landlords investing in property could reflect on when deciding on a property size, and whether to invest in flats or larger houses.
A major focus on running costs
Generally, flats will of course have much cheaper running costs than houses – although this obviously depends on factors such as EPC rating and general energy efficiency, as well as appliances installed. On the whole, new-builds rank much higher for these factors.
The research from Help Me Fix shows that the average annual energy bill for a detached property is now £3,300, which is almost double last year’s figure of £1,614. At the other end of the scale, flats currently generate bills of an average £1,750, which is a colossal difference.
Still, this time last year, energy costs in flats averaged £856 per year, so tenants in the private rented sector living in apartments will still have seen their outgoings increase dramatically.
In between these two extremes, semi-detached properties now have average annual energy bills of £2,650, which is up by £1,296, while terraced homes have seen their energy outgoings soar by £1,150 to £2,350 this year.
Of course, when dealing with property investment, it is unlikely that an investor is choosing between a detached property or a flat, but knowing the difference that can be seen in energy bills can be a deciding factor when thinking about size in general – such as choosing between one-bedroom or two-bedroom flats.
Two-bedroom flats top choice
Ettan Bazil, CEO and founder of Help Me Fix, said: “It might seem like an extreme resort – downsizing your home to reduce the cost of living – but for some, it may be the only option and its one that could well help keep a roof over their head during what are very tough times at present.
“It makes financial sense even for those who might not be struggling when it comes to heating their home.”
Back in September, a Zoopla report looking at Q3 2022 results revealed that, for tenants in the private rented sector, two-bedroom flats currently appeared to be in the highest demand, with a 36% increase in tenant interest.
It also pinpointed city centre flats as particularly popular among tenants. It highlighted the fact that urban areas have had average rental growth of 10.5% over the past year on average, compared with 8.5% in rural markets, indicating stronger city demand.
The jobs market is a major driver behind this “return” to the city, particularly as industries continue to recover post-Covid, with the report adding: “Higher levels of new-build supply concentrated around city centres is also becoming more appealing to renters looking for smaller homes with lower running costs.”
Linking in to how the size of property directly impacts energy bills, which is a major consideration for many, the report adds: “A one-bed home requires less than half the gas that is needed for a 3-bed home, while D and E rated homes require 25% and 48% more gas, compared to a C rated home.”
