Commercial insurance article archive
The benefits of energy efficient properties for landlords and tenants
Landlords can play a big role in promoting energy efficiency
During the current economic downturn, it is becoming increasingly important for industry and individuals alike to implement energy efficiency for cost-effectiveness, so how can landlords and buy-to-let investors make their mark in the quest?
There is much debate over how costs can be cut in the home, with companies and industry bodies putting forth their views on what are the most effective methods of energy saving, how much money can be saved through adopting such measures and what the environmental impact may be as a result.
On October 1st, a law came in obliging landlords and all building sectors to display an Energy Performance Certificate (EPC) in order to show occupiers of commercial or residential property its energy-efficiency rating.
Through inspections of the property it will be scored from A to G in terms of energy efficiency and the results will need to be put on full view for residential and business tenants. It also aims to show landlords what they could achieve if their property is slightly below par and how to get there.
Recently, the Energy Savings Trust (EST) said landlords may find it easier to attract the best prospective tenants if their dwellings possess energy-saving features, or by installing such amenities. Nancy Baynes, spokesperson for the organisation, said the lower running costs inherent in an energy-efficient home will be appealing for occupiers and they may even be put off by one which does not meet certain standards.
"Our Green Barometer research tells us that eight in ten people would think twice about renting from a landlord whose property had a poor EPC. We urge all landlords to see this new legislation as an opportunity not a challenge," she explained.
Ms Baynes went on to point out private housing tenants could save up to £700 a year on energy bills if their landlords installed "straightforward energy-saving measures".
The Landlords Energy Saving Allowance (LESA) was brought in to make it easier for people who rent out property to purchase and install such features as draught proofing, loft, floor and cavity wall insulation as well as insulation for hot water systems. Up to £1,500 per property can be claimed for these items on the landlord's tax bill when filling out returns.
The Energy Efficiency Partnership for Homes (EEPH) believes insulating an abode can not only increase its long-term value but reduce tenants' energy bills and problems with damp and the costs associated with treating it. The EEPH is a network of more than 450 organisations from the public, private and voluntary sectors aiming to reduce how much energy UK households consume while ensuring people can afford to sufficiently heat their homes in the winter.
Due to the introduction of the LESA, there is "no good reason" for landlords to pass the cost of installing energy-efficient upgrades to their tenants, Ms Baynes also said.
"There is financial support available which can help recoup any financial outlay involved," she remarked.
Friends of the Earth (FOE) recently backed up the point of a "clear public appetite for green homes", which applies not only to those who rent out dwellings but estate agents and property developers. Marie Reynolds, spokesperson for the charity, emphasised the current slowdown in the economy and growing concern about rising prices could be a good motivator behind this recognition of the benefits of being green.
She said: "Some green measures, for example solar panels, are currently expensive to install but once in they actually save households hundreds of pounds every year – and help cut carbon dioxide emissions at the same time. If you can buy a house with green features already fitted, you only stand to gain financially."
The organisation also pointed out the credit crunch and fuel price fluctuations should not stop a person from going green and that for tenants and landlords alike, "a change of attitude" is sometimes all that is necessary.
For instance, putting in energy-efficient appliances such as a washing machine uses two-thirds less electricity and less water, which cuts down on costs as well as wastage. Ms Reynolds said updating the boiler and installing loft installation can reduce resource use and bills at the same time.
There are simple things tenants can do too to make a difference, the FOE notes, something landlords could perhaps play a role in encouraging. Lifestyle changes such as recycling more and washing clothes at lower temperatures are among these measures. Landlords are advised anything they need to invest in out of their own pocket has to potential to lead to lower bills for their tenants, which will help retain and attract the ideal candidates for their property.
Ms Reynolds said: "Friends of the Earth is calling on the government to make it cheaper and easier for people to go green.”
"For example guaranteeing a premium payment to households, businesses and communities for generating their own renewable energy from systems such as solar panels and wind turbines would encourage a real boom in green energy."
However while the environmental benefits may be far-reaching, Kevin McCloud, presenter of Channel 4's Grand Designs, recently counteracted the argument by saying solar - or photovoltaic - panels can take up to 40 years "to pay back" as Britain does not generally receive much sunshine. He suggested signing up to purchase electricity from a sustainable producer such as a large-scale wind turbine supplier to negate any costs associated with replacing domestic devices down the line.
Mr McCloud voiced an interesting concept - that the location and altitude of a new build, can affect how sustainable and energy efficient that property can be in the long run.
"Sustainable solutions are very responsive to where you are. Depending on where you live – the altitude, the location, which way you face – your solution would be very different to your friend who lives down the road," he explained.
Another way of providing energy-efficient heat for a new build is through ground-source heat pumps, according to the author of the Housebuilder's Bible Mark Brinkley.
While this method is not really set up for existing properties due to the amount of space they take up, anyone considering constructing a new property could install one. The machine is fuelled by electricity to drive heat from the ground into a building, which can then be used for space or even water.
"For every unit of power you put in, you get three units of heat out," Mr Brinkley commented.
Landlords have a range of options open to them for promoting energy efficiency in their existing or new-build properties. Expert opinion suggests landlords may want to step back, check what beneficial features they have already installed and what further steps they could take to improve on them, while encouraging their tenants to 'top up' these elements with simple lifestyle changes.
14 Nov 2008