Why should landlords invest in energy efficiency upgrades?
It’s a tough market for landlords right now. Rising interest rates and higher taxes are reducing profit margins, leading to lots of landlords either selling up or reducing the amount they invest in maintaining their properties.
At Good Energy, we see a viable third option – investing in your property to grow its value. In this article, we explain why making your rental property sustainable and eco-friendly will attract high quality, reliable tenants and lead to long term benefits for landlords and tenants alike.
What’s the problem with spending less on my property?
Houses need care and maintenance to make them warm and safe places to live for your tenants to live. Letting your property deteriorate might lead to your tenants leaving; or staying and refusing to pay rent.
It’s also worth future proofing to ensure your home meets letting requirements. At the moment, no home that is rated lower than EPC E can be let. But from 2030, all rental properties will need to be EPC C or above – according to a recent announcement by Energy Security and Net Zero Secretary, Ed Milliband.
How should landlords invest in their rental property?
The following solutions can help to improve the energy efficiency and EPC rating of your rental property – helping you to attract loyal, reliable tenants at a higher market rate.
1. Insulate your property
Insulating your rental property is one of the best ways to enhance the living environment and improve its EPC rating, by as many as 30 points if your home is EPC E or G rated.
A cost-effective place to start is in the loft, where up to 25% of heat is lost.
Installing insulation will make the property warmer and more comfortable for your tenants and lower their heating costs. It can also help to prevent damp and mould – improving health and wellbeing and cutting your maintenance costs.
2. Install solar panels
Installing rooftop solar is a proven way to reduce monthly costs for tenants and to increase income from your rental property. You could price the reduced electricity cost into your rental agreement, helping to improve tenant loyalty.
Households normally use 50% or less of the electricity that is generated from a rooftop solar array; and anything they don’t use, you would get paid for directly via an export tariff. We pay customers that install solar panels and a battery with Good Energy an exclusive rate of 40p per unit exported to the grid for the first 12 months.
Installing a 4kW solar panel array can add 10 – 15 points to your EPC rating – bringing it up by a whole band.
3. Install an air source heat pump
If you are due to replace an aging boiler in your rental property, then it’s the perfect time to consider an air source heat pump.
Heat pumps provide efficient, effective, low-carbon heating for properties of all ages and sizes. They are highly reliable and tend to last longer than traditional boilers, meaning you’ll likely have lower ongoing maintenance fees; and running costs tend to be lower for tenants too.
With a government grant of £7,500 available to help you with the upfront cost, you may be surprised to learn that it doesn’t cost a lot more than a traditional boiler replacement either.
What grants are available to landlords wanting to improve their EPC rating?
At the moment the following grants are available to help homeowners to make energy efficiency improvements. It’s possible that more will be added by our new Government to help landlords to achieve EPC C:
- Boiler Upgrade Scheme – a £7,500 grant to replace a fossil-fuel heating system with a heat pump, available to all UK homeowners.
- Energy Company Obligation (ECO) – if your tenants receive certain benefits, and your property is in EPC rated E-G.
- The Great British Insulation Scheme – If your property is EPC D-G rated, and falls within council tax bands A-D.
What are the benefits of landlords improving their EPC?
The benefits of making eco-friendly upgrades, such as insulation, solar panels and heat pumps, start immediately.
Combined, these updates have the potential to improve your EPC rating by up to 3 bands (E – B for example).
This helps you to attract reliable, respectful tenants that prioritise comfort, lower bills and low-carbon living and are willing to pay more for it.
Improving your EPC rating helps you to attract reliable tenants that will pay more for low carbon living.
Energy efficiency improvements can improve your tenants’ quality of life and cut their bills, reducing their likelihood of them leaving or refusing to pay.
What’s more, installing insulation or an air source heat pump can help you to reduce ongoing maintenance costs – such as boiler breakdowns or issues from damp and mould.
And finally, when you do come to sell, eco-friendly upgrades will improve your property’s saleability and value.
Good Energy specialise in home surveys, bespoke designs and professional installations to help landlords decarbonise their properties and add value to their portfolios.
We work with quality estate agents, including Smart Estate Agent in Exeter, offering exclusive discounts to make the installation of solar and heat pumps more attractive.