How rising energy bills are impacting London rental market

How rising energy bills are impacting London rental market

The cost of living in the UK is soaring high, and the major reason behind it is the rising energy bill. According to the Lifestyle Survey, more than 70% of respondents have blamed the utility bill as the cause of the costlier living. It is to be noted that the increasing cost of energy bills has significantly affected the rental market in London.

The last hike in energy prices was noticed in April 2022. That is why the housing market in the UK predicts a considerable shift in the needs of renters.

Having an energy certificate rating is now more important for landlords. With an energy-tight property, you can save several pounds every year. However, the rise in the cost of electricity will affect everyone, including homeowners, tenants, and landlords.

For instance, as a landlord, you need to cover the energy bill of a vacant property. Moreover, while renting out a house, the energy cost may not be included in the monthly rental cost. The increased energy price cap will add costs to every household’s bill. That is why London rental prices and the overall cost of living are on the rise.

According to a report, it may take 3 years to resolve this energy crisis. However, market analysts think that there is no sign of a reduction in the rate because the Ukraine war has significantly affected gas prices.

What is the reason behind the increased energy price cap?

On 1st April 2022, there was a rise in the energy price rate by 54%. It has affected more than 75% of households. It will result in a large number of fuel-poverty households. Households that have prepayment meters may find an increase of around £708.

Ofgem has the responsibility to manage the price cap to ensure a fair energy price for both the providers and consumers. It makes decisions based on the market situation, and presently, the costs of both gas and electricity are high.

The higher price cap has affected the percentage of the cost that is to be passed on by the energy provider to the consumer. Ofgem has declared that it will start evaluating the price cap at the end of every quarter. It will be advantageous for consumers to identify the benefits when the rate declines from highs.

Renters looking for tenancies with energy bill included

The recent trend shows that tenants prefer properties that include all utility bills in the rental charge. The property listing websites have found that more tenants are hunting for the best build-to-rent houses with monthly bills included. As there is a chance of further rises, the all-in rent has gained popularity.

However, the average rent will also be higher in the coming months. Tenants feel financial pressure due to the London rent increase.

What should the tenants do to minimise the effect of a costlier energy bill?

Tenants should measure the level of the effect of the price hike. They have to identify the right steps to reduce the negative consequence of the increased price.

Those who have chosen the fixed-term tariff can continue with the current contract. There is no chance of finding a better rate. On the contrary, tenants who have chosen a variable tariff will feel the effect of the price hike. They can select new fixed deals.

Tenants have to look for the best energy-efficient rental homes in the UK. Moreover, they like to grab Energy Bills Rebate in the winter season.

EPC requirements and rental properties in the UK

According to the UK government, rental properties should have a minimum EPC rating of C. Without a valid EPC, you may need to pay penalties of £30,000. However, achieving this EPC rating is not easy for those who have older buildings. In this case, property owners can invest in insulation for floors, lofts, and walls. The proposed requirements from the UK government are intended to save the optimal amount of energy by 2050.

The most important step is to choose an approved assessor for energy assessments. Both letting agents and landlords should give tenants a written notice at least one day before the property visit. Cooperate with tenants to find the most suitable time for energy evaluation in your property.

After receiving an up-to-date report, you need to take steps to make the rental house more energy-efficient. For instance, you can install-

● Energy-saving heating systems

● Draught-proofing cracks and gaps

● Double glazed doors and windows

● LED bulbs

● Heat pumps, solar panels and other renewable energy systems

● Smart meter

How much is the current rate of rental houses in the UK?

On average, the monthly rent in the United Kingdom is around £1,069. It indicates an 8.6% increase in the rate last year. But, the rate is different in every area in the UK. For instance, the rent is £1,757 per month in London, while the average rent in Wales is £727.

Why is the rental market so bad in the UK?

In recent years, more tenants have started inquiring about the availability of rental properties. It has made the rental property sector highly competitive. So, the shortage of rental properties and a large number of tenants have caused an impact on the market. Houses with communal gardens and balconies have become popular.

Around 60% of landlords claimed that they had kept their rental charge unchanged. But, the rest of them said that they had increased the monthly rent.

Due to the higher demand for rental properties and shortage of availability, several tenants have thought of renewing their leases. However, landlords also understand that rising bills and rents have resulted in affordability challenges.

As a landlord, tenant, or letting agent, you like to know about the UK rental market. To get the best guide, you can visit the site, https://www.trpe.co.uk/. At TRPE, there are professionals to help you with area guides, lettings, and property evaluation. You can also find an affordability calculator on the online platform. TRPE consultants can provide the best information on the local market.