Whether to reduce their carbon footprint or to live in more comfortable accommodation with cheaper bills, tenants are prioritising sustainability in their rentals – and property investors are too.
New research has revealed that going green is a growing priority among today’s private rented sector tenants, making it a key trend among landlords looking to keep their competitive edge.
The rise in interest in sustainability has also coincided with surging energy bills, which are a major consideration among tenants – particularly those on lower incomes or who are trying to save up a deposit to buy their own home. Paying a premium for an energy efficient home can therefore be worth it when weighing up the savings on utilities.
According to Handelsbanken’s Property Investor Report 2025, which surveys landlords and property investors across the UK, a huge 92% of investors find that tenants are willing to pay more for greener homes (as well as commercial premises for respondents with commercial properties).
At the same time, more than three quarters (77%) of investors reported a surge in demand for sustainability features including heat pumps, solar panels and electric vehicle charging points, all of which are becoming more common in homes across the country.
Sustainability is “more than a buzz-word”
The government’s focus on achieving net-zero by improving the energy efficiency of the country’s buildings has been a driving force behind some of the shift towards more eco-friendly homes.
At the moment, all privately rented properties must achieve a minimum energy performance certificate (EPC) rating of E, but there are plans to increase this to a minimum of C by 2030.
This has sparked some investors to already begin reviewing their portfolios, which may involve selling inefficient properties and reinvesting in newer A, B or C-rated homes; or retrofitting and upgrading existing homes in order to achieve the upcoming minimum rating.
In Handelsbanken’s survey, more than a third (36%) of investors said the proposed EPC reforms made them feel positive about the market, while more than half (56%) said they see no negative impact from the proposed changes.
According to the bank, sustainability is “more than a buzzword; it’s a business strategy”, as the market continues to adapt to various economic headwinds, evolving regulations and shifting consumer expectations.
Richard Winder, Head of Sustainability at Handelsbanken plc, said: “We’ve seen landlords’ thinking mature over recent years in response to clear market signals. Investing in sustainable features offers a rare opportunity to woo good tenants, grow revenues and preserve tomorrow’s financial value, while cutting long-term operating costs.
“As regulations tighten and our worsening climate moves centre stage, the clamour for more sustainable and resilient buildings will only grow.”
Tenants want more from their rentals
The message from Handelsbanken’s report is that tenants are increasingly expecting their rental homes to keep up with sustainability trends, while being willing to pay for the privilege.
More than half (57%) of tenants are now asking for electric vehicle charging points, while 47% of landlords say tenants are demanding higher EPC ratings of C or above.
This is likely to influence how landlords are investing, with more of an interest in new-build or newly renovated properties that have the highest energy efficiency credentials. These are likely to not only be more future-proof when regulations change, but to attract the highest number of tenants and the strongest rents.
Landlords are also optimistic about the performance of their property portfolios, with 80% expecting the value of their portfolio to rise despite market uncertainty, while 54% plan to expand their portfolios over the next 12 months.
James Sproule, UK Chief Economist at Handelsbanken, added: “Sustainable properties aren’t just good for the planet, they’re good for business. In a market where competition is fierce and tenants have choices, going green is the edge that can make the difference. Those who adapt will thrive; those who don’t risk being left behind.”
Want to stay ahead of the market? Get in touch with BuyAssociation today to find out about our future-proof investment opportunities with sustainability features.
