How going green can give landlords a warm glow

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Jonny Murton-Lavelle, director at Murton & Co chartered surveyors, says there’s help available for landlords who want to reduce energy bills and keep their tenants cosy this winter

We’ve got the oldest and coldest housing stock in Europe and the private rental sector is no exception. It’s estimated that nearly two-thirds of rented homes - more than three million properties - need energy efficiency improvements, while all tenants need to stay warm and comfortable while facing rising fuel bills.

Some landlords might question whether they’re going to see a return on their investment if they pay out for these improvements. There’s talk about ‘pay back’ when fitting heat pumps or solar panels - but you wouldn’t expect that with a gas boiler. In the same way a new fitted kitchen or conservatory adds value to a property, so can green improvements. An energy-efficient home is also an attractive selling point that buyers are often prepared to pay more for, and tenants value an energy efficient home too. A recent survey by British Gas found that nearly half of tenants consider a lack of energy efficiency features to be a deal breaker when choosing a property.

This survey also found that although 81% of residential private landlords recognise they need improvements are needed to make their property more environmentally friendly, only 23% would actually fork out for them. It’s no doubt partly due to Rishi Sunak’s announcement earlier this year that they won’t have to meet proposed energy efficiency targets any time soon – doubtless a relief to those who expected to face fines if they didn’t raise EPC (Energy Performance Certificate) grades to a C by 2028. The Prime Minister also gave everyone more time to make the transition to heat pumps, with the ban on new oil boilers delayed from 2026 to 2035, and a target for only 80% to be phased out by that date.

However, it’s important to remember that there is plenty of help available to go green. Landlords can access a growing number of finance products to make energy efficiency upgrades or to fund the purchase of new, greener investment properties through reduced interest rates. Many councils also offer cheaper landlord licences if their properties have a lower EPC rating.

Many landlords – and tenants – may be eligible for either the government’s new Great British Insulation Scheme or EC04 scheme, which offer financial help for energy-efficient upgrades to households with a low EPC rating. There’s also been a recent boost to the Boiler Upgrade Scheme (BUS), increasing the grant available for heat pumps up to £7,500 in England. It means heat pumps should start to become more mainstream, particularly as firms like Octopus Energy are promoting their new Cosy 6, offering a £9-a-month service plan that lets customers get a loan for the pump over four years, which they need to pay back if they sell the property or move.

There’s a lot of misinformation about heat pumps, particularly that they’re not suitable for some properties, which simply isn’t true; every property is suitable, although a well-insulated house will of course make it more cost-effective. These pumps use technology like that found in a refrigerator or air conditioner, essentially in reverse. They’re powered by electricity and are at least three times more efficient than a gas boiler, so as the price of electricity comes down, so will the cost of running a heat pump. Let’s face it, a decade ago, we would have marvelled at a solar panel system on a roof, but now 1.2 million homes have them, and we don’t bat an eyelid.

However, as well as carrots to get landlords going green, the government has also vowed to use sticks such as the introduction of a Decent Homes Standard, part of the upcoming Renters Reform Bill. The current standard sets out that social housing must provide a “reasonable degree of thermal comfort” and effective insulation, so it’s fair to expect this will apply to the private rented sector. It aims to reduce poor standards in rented homes by 50% by 2030, giving local authorities new powers to force landlords to bring properties up to standard, with fines of up to £30,000. But for most conscientious investors, the benefits of making their properties comfortable and warm should outweigh the penalties.

Before deciding to invest in green technology, particularly when applying for funding under the Boiler Upgrade Scheme, a property first needs an EPC. However, this is a fairly basic process; to understand exactly how a property is performing, a thorough energy assessment is the way to go. This will not only determine the EPC band but measures heat loss, as well as conducting an air test and thermal imaging to create a more accurate, bespoke solution for the property. It provides recommendations on which measures are the most cost-effective, have the most impact and in which order to carry them out. It would help ensure landlords get the right heating solution for their property for example, instead of wasting money on the wrong sized boiler or heat pump.

Making sure your rental property is up-to-scratch and energy efficient always starts with asking questions and being armed with the right information. A good chartered surveyor like Murton & Co, which specialises in energy assessments, will certainly have most of the answers.