A landlord's guide to energy efficiency

POSTED: 29th June 2015
IN: Landlord helpful guides

How can landlords prepare for incoming legislation on the energy efficiency of rental properties?

undefinedOver the next three years, new regulations announced by the Department of Energy and Climate Chance (DECC) will gradually come into force, requiring landlords to make improvements to the least energy-efficient rental properties on the market.

Incoming legislation

The measures are designed to reduce tenants’ energy costs and the environmental impact of older homes. From April 2018 all rental properties in England and Wales will need to meet at least band E on the Environmental Performance Certificate rating system. In addition to this, from April 2016, tenants will have the right to request home improvements to boost energy efficiency, with landlords obliged to comply unless there are reasonable grounds for refusal.

According to the DECC, almost one in ten properties will be affected by this change, meaning around 1 million tenants could stand to save an estimated £880 per year on their heating bills. The enhanced energy performance of the property could have a positive impact on the rental value of the property and encourage tenants to stay for longer, forgoing the administration costs of finding replacement tenants.

In many cases, the DECC suggests making just one simple change, such as  installing loft installation, could be enough to bring properties currently rated in category F or G up to the required standard. Moreover, exemptions are in place to safeguard landlords against being obliged to pay for upgrades which are not ‘permissible, appropriate and cost-effective,’ and several government support schemes have been set up to help landlords cover the up-front cost of improvements.

Support schemes

The Green Deal initiative offers funding for upgrades including draught proofing, water-pipe lagging, and insulation for floors, lofts and solid or cavity walls, with boiler replacement, solar panel installation and double glazing also applicable in some cases.

The cost of these measures is then gradually recouped from the tenant’s energy bill savings, meaning consent must be given by both the tenant and the landlord before entering into the scheme. During periods of vacancy, this responsibility would pass to the landlord until a new tenant is found, who must also be made aware of their obligations under the scheme.

In order to apply for this funding, landlords must first supply an Energy Performance Certificate compiled within the past two years or ask an accredited Green Deal provider to conduct a Green Deal Assessment Report.  Thankfully, since improvements will only be made following the recommendation of an official provider, tenants can rest assured that upgrades will not be carried out if the new bill and repayment cost would exceed what they currently pay in energy costs.

Alongside the Green Deal Scheme, help may also be available through the Renewable Heat Incentive and Feed-in Tariffs schemes, which promote more sustainable energy practices, while the Energy Company Obligation (ECO), provides support for low income tenants and vulnerable households.

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