A surge in green spending by UK landlords is underway, with nearly nine in 10 investors diverting increased budgets towards eco-friendly upgrades to meet escalating energy costs and changing tenant demands. The latest report from Handelsbanken reveals that a significant majority – 89% of those surveyed – are prioritising sustainability measures, with energy efficiency a key area of focus.
The Property Investor Report highlights that this trend is being driven by more than just regulatory requirements, as landlords make planned improvements to safeguard property values and mitigate future operational costs. Market demand from tenants who increasingly value efficient homes is playing a significant role in accelerating these investments.
According to Handelsbanken's Head of Sustainability, Richard Winder, climate change has become a core commercial consideration for property investors. He noted that further energy price volatility, severe weather conditions, and decreasing clean technology costs have made sustainable investment more urgent. While regulations will tighten, tenant preferences are currently driving immediate changes, with renters placing greater value on comfortable, resilient, and efficient buildings.
Tenant demands are increasingly focused on practical features such as Energy Performance Certificate (EPC) ratings of C or above – a requirement cited by 66% of respondents. Electric vehicle charging points (50%), smart meters or home technology (47%), and solar panels (43%) also feature prominently in tenant wish lists.
Interestingly, while 68% of landlords believe tenants will pay more for greener buildings, this figure has dropped from 92% in the previous report – a possible indication that investors are starting to view sustainability as an essential investment rather than solely as a means to increase rent. Regionally, landlords in Wales (79%), Scotland (78%), and the West Midlands (76%) were most confident that tenants would pay more for greener homes.
Demands for higher EPC ratings varied across regions, with the North East of England (80%), South West (79%), and London (77%) showing the highest levels of tenant expectation. This trend suggests a widespread shift in investor strategies and tenant preferences, underlining the importance of sustainability measures for both landlords and tenants.