Will energy efficient Buy-to-Let properties keep your tenants happy?

What do the proposed new EPC regulations mean for Buy-to-Let Landlords?

With a major focus on the UK’s carbon footprint, the government has assessed the major culprits affecting the nation’s emissions and realised that 15%[i] of greenhouse gas emissions in the UK are from the residential sector.

Landlords could be facing pressure from two directions with a recent study highlighting that 85% of renters do not feel that their property is as energy efficient as it could be and are concerned that a current lack of energy-efficient measures will make their personal energy costs even higher[ii].

The government set out its stall at the recent COP26 summit and has since turned its focus on improving the energy efficiency of all our homes by paying particular attention to buy-to-let properties and new build developments. The onus very much seems to be on the Landlord with a deadline just a few years away to make the energy-efficient renovations.

What are the current EPC guidelines and how are they changing?

Energy Performance Certificates are needed whenever a property is built, sold or rented. In order to provide information about a property’s energy use and potential energy costs an accredited assessor will rate your property from A (being most efficient) to G (least efficient). At present this EPC is valid for 10 years.

Currently, all rental properties must be at level E or above, however the latest news is suggesting that the majority of rental properties must be at Level C or above by 2028[iii]. (It is worth noting that all new tenancy contracts must be at Level C by 2025 whereas existing tenancies should be compliant by 2028). There may however be some exemptions to this - for example if your property is listed[iv] the potential works needed to improve energy efficiency could alter the original character of the building in a negative way. Similarly, other properties which are currently exempt are listed on the government website.

How much will the EPC improvements cost Landlords?

At present the current Private Rental Sector (PRS) Regulations states that the ‘landlord spend requirement’ to improve the EPC rating is capped at £3,500 inclusive of VAT. This cap is in place to ‘ensure that any improvements are made at reasonable cost’[v]. There have been calls to increase this cap to £10,000 to take inflation into account and are the subject of a consultation[vi]. The government states that they have ‘considered various alternative ways to determine the level of the cost cap. Alternatives could include varying the cost cap, based on factors such as rental income, geographic location and EPC rating starting points’[vii] but at the time of writing no final decisions have been made.

What potential works need to be done by Landlords to improve the EPC rating?

An EPC assessor will have a checklist which focuses on the construction of your property, how well it is insulated and if the heating system is efficient for the size of the property. Checking for energy efficient light bulbs and the quality of the window glazing is also high on the list.

Recommendations as a result of an EPC report are likely to include[viii]:

  • The installation of cavity wall and loft insulation
  • The draught-proofing of windows and doors
  • Insulation of pipes and tanks
  • Installing a condensing boiler
  • Reducing water usage
  • Considering energy efficient glazing
  • Considering renewable energy technology such as a wood fuelled heater, solar panels or wind turbines
  • Installing low-energy usage light bulbs

 

Is there a smart way to keep your tenants and the planet happy?

Before you tackle any major works to your property, there is one quick fix which can give both you and your tenants peace of mind whilst maintaining a focus on energy efficiency. A study highlighted that 67%[ix] of tenants knew that having a smart meter installed would help them to manage their energy costs but worryingly 14% thought that their landlord would not approve and were concerned they may lose their deposit!

Introducing a Smart meter to your rental properties would not only keep your tenants happy but it also has the bonus of providing immediate end-of-tenancy and start-of-tenancy readings. As a landlord you would only be paying for the exact amount of energy used in empty properties between tenancies making the installation of a smart meter not only a positive step for you and your tenant but also for the planet.

With years of industry experience, Stride is here to help you to protect your property investments by providing you with quality landlord insurance. Get in touch with us today to find out more.

Contact the Stride team today! 

 
Published: 18th January 2022 (Maddie-Dean)
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