Rental properties which are more energy efficient are attracting a “premium” to live there, a report has found.
Private sector tenants in England pay a typical premium of around £85 per month to rent a home with an energy efficiency rating of A or B compared with an equivalent property with a D rating, according to the analysis.
The research was carried out by The Mortgage Works, which is part of Nationwide Building Society.
Concerns around household bills and energy prices, against a background of global uncertainty, could make more energy efficient homes particularly attractive to tenants.
The Mortgage Works’ research indicated that in 2025 tenants in England were paying an average premium of 8.1% for an A or B rated property, compared with similar D-rated property, which is the equivalent to around £85 per month, based on typical rental prices.
The typical premium was found to have increased from around £70 per month in 2024, when the average premium was around 7.0%.
The latest research found that C-rated properties attract a more modest premium of 1.8%, equating to around £20 per month, compared with a D-rated home.
For E-rated homes, tenants were typically paying around 1.7% less than for a D-rated property, equating to £18 per month in cash terms.
However, for landlords looking to upgrade their property, there is also a price to pay.
The research indicated that, based on 2024 costs, the average cost to upgrade a pre-1919 property to band C is around £10,700.
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The report said: “Properties built more recently tend to be more energy efficient, so fewer improvements are required in order to bring them up to C standard.
“For example, the average cost to update a property constructed between 2003 and 2013, currently rated D-G, to C standard is just £2,500.”
The analysis involved looking at government figures as well as The Mortgage Works’ own data.
Dan Clinton, head of buy-to-let at The Mortgage Works, said: “Forthcoming minimum energy efficiency standard regulations create a strong incentive for landlords to improve their properties to EPC C so that their portfolio remains sustainable in the long term.
“Given the rental price premiums observed for properties with an EPC A to C rating, alongside the benefits for tenants of living in energy efficient homes, upgrading now seems a logical choice for landlords planning to remain in the rental market beyond 2030.”
The Renters’ Rights Act also came into force from May 1, giving private tenants stronger rights and protections, including the end of Section 21 “no fault” evictions, meaning private landlords will not be able to evict tenants without a valid justification.
There are also rules around rent increases, and landlords must also reasonably consider renters’ requests to live with a pet.
