Landlords spend an estimated £839m a year upgrading new rental properties before letting them out to tenants, according to Paragon Bank.
A survey of around 900 buy-to-let owners shows that nearly four in five, or 77%, invest in upgrading their properties after purchase, spending an average of £8,720 each.
It adds that based on the average number of buy-to-let mortgages granted each year since 2015, this equates to an £839m annual investment in upgrading private rental stock, which “drives up standards in the sector”.
The new report, called Driving Standards in the Private Rented Sector, says the most common work undertaken is general painting and maintenance, carried out by 67% of landlords, electric or plumbing work, 44%, and laying new flooring, 37%.
It adds 32% of landlords install a new kitchen or bathroom, 24% install a new boiler and 23% upgrade windows.
The survey says since 2006, the portion of homes in the sector classed as ‘decent’ under government standards has lifted from 53.2% to 76.7%.
Overall, 3.6 million homes are now classed as ‘decent’, compared to 1.4 million in 2006. Over that period, 1.4 million buy-to-let mortgages for house purchase have been approved.
Yet the number of homes classed as ‘non-decent’ in the privated rented sector has not reduced significantly, with 1 million homes categorised as ‘non-decent’ today compared to 1.21 million in 2006.
The report, by the Solihull-based lender, says: “This suggests that the growth in new properties coming into the private rented sector over that period is driving up standards for the sector overall and diluting the stubborn proportion that remains ‘non-decent’.”
The survey adds that the proportion of private rented stock built since 1991 has grown from 14% in 2009 to 22% in 2019, with the number of homes in this category doubling over the period – 509,000 to 1 million.
The energy performance of the sector has jumped, with a 272% increase in private rented sector homes with an energy rating of C or above since 2009 to 1.8 million.
It also says that these homes are larger. Compared to 2009, there are a greater proportion of homes in this sector of at least 70m2 — 50.6% today compared to 48% in 2009. In terms of absolute numbers, the report says, that equates to a 38% increase in the number of properties to 2.4 million.
Paragon Bank managing director of mortgages Richard Rowntree says: “Landlords typically will make significant improvements to a property before letting to tenants, helping to improve standards across the private rented sector.
“Landlords will of course benefit from this investment through capital appreciation, but it always results in better quality homes for tenants.”
Rowntree adds: “There is a clear correlation between buy-to-let investment and improving standards in the quality of private rental homes. Standards of property in the private rented sector have increased significantly over that period.
“Overall homes in the sector are newer, larger, warmer and more energy efficient than they were ten years ago and tenants have more choice.”
