Portfolio buy-to-let landlords are responding to a changing market and are starting to seriously consider the green credentials of homes, along with rental yield and opportunity for capital growth, when making investment decisions, according to new research from specialist lender Hodge.

Its research asked landlords, investors, and brokers what their top priorities were when purchasing properties, and found that, for 82% of respondents, environmental friendliness and energy efficiency were up there with rental yield in the top three considerations.

Andy Button, head of investment finance at Hodge, said: “The buy-to-let market is particularly buoyant right now with demand continuing to grow throughout the pandemic, and it’s interesting to see how the priorities for landlords are changing when looking to add to their portfolio.

“While rental yield and potential for capital growth are, of course, top priorities our research reflects a change in mood of the market, where sustainability and green credentials are becoming ever more important.”

“According to a recent Savills report, 26% of people considered the environment the most important issue facing the country and, according to Opinium research, 78% of the public believe they have a personal responsibility to deal with the climate crisis – many of these people will be renters. Therefore, to stay competitive landlords can’t ignore tenant preference; they, along with developers and estate agents, are having to provide choice in sustainable housing options.

“It’s clear that sustainability will feature more and more in new build development design, and more stringent compliance to EPC, and an investment strategy more closely aligned to sustainability could actually improve cash flows in the longer term, as tenants might be prepared to pay higher rents, in exchange for lower utility costs.

“Our research suggests that investors are very much alive to the longer term benefits that having sustainability credentials in a portfolio can afford.”