Landlords Not Switched on to Energy Efficiency

Landlords Not Switched on to Energy Efficiency

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Landlords Not Switched on to Energy Efficiency
Green grassed house

"A third of landlords ignoring the green calls"

More than a third (35%) of buy to let landlords don’t know or don’t care that their rental homes fail to meet minimum energy performance standards.

Around another 17% of landlords suspect their letting properties would not meet the basic standards expected by the government’s new Green Deal.

From 2018, buy to let homes that fail to score more than the minimum will be banned from letting until remedial works are carried out.

Meanwhile, the Green Deal will make funding available for energy efficiency improvements from next year.

Landlords can take a loan of up to £10,000 to improve each letting property with repayments coming from energy savings resulting from the work.

The findings come from new research by the Association of Residential Letting Agents (ARLA) that looks at tax breaks and other incentives for landlords to upgrade their properties.

Ian Potter, ARLA’s operations manager, said: “The clock is ticking for the landlords to improve environmental performance, but the investment just isn’t there to ensure that this change takes place in the government’s timeframe.

“ARLA has campaigned for the government to incentivise – through tax relief – the improvement of rental properties.  Otherwise it is going to be exceedingly difficult for the majority of landlords to find the funds to improve stock.”

Under the Green Deal, tenants will repay any money loaned to the landlord for energy efficiency improvements as a levy on their bills – but many property investors are concerned tenants will not welcome the extra cost.

“The issues of fuel poverty among too many households has been raised again as we approach winter,” said Potter. “We urge the government to ensure that the Green Deal is an effective solution to the crisis we will face unless the energy efficiency standards in housing stock can be improved.”

Energy Performance Certificates (EPCs) disclose all the information a landlord needs about the energy rating of a letting property.



Comments

John Plumridge

7 years ago

Mark,

As one of the companies (I'm afraid there are others) who promote free solar installations on suitable roofs we don't understand why more landlords do not contact us to investigate this. At zero cost it could help improve their properties environmental performance by reducing electricity usage and bills by 25% to 50%.

It seems like landlords only want to act on this issue when they will be forced to do so..

7 years ago

Mark, just to clarify some of the points you raise. The minimum requirement of an E rating on an EPC will be a requirement for Landlords from 2018, this legislation will be passed under the Energy Bill. The Green Deal will provide the funding for Landlords to install energy efficient measures and this cost of this will be paid through energy bills. However the actual cost of bill will remain largely the same as the repayments are offset by the savings generated by the energy saving measures.

There are an estimated 682,000 properties that are likely to require upgrading.

Also worth noting is that from April 2016 landlords will not be able to refuse reasonable requests from tenants, or local authorities acting on behalf of tenants, to improve their property. The definition of a "reasonable request" is yet to be clarified.

Energy Performance Certificates show the current Energy Rating along with the proposed rating if the recommendations shown in the report are undertaken. The EPC will be modified to accommodate the Green Deal when it is launched next year.

EPC Choice

7 years ago

Trouble is, most tenants are their own worst enemies. How many actually ask to see the landlord's EPC for the property they want to rent? Even my own daughter failed to ask for one for the flat she is renting in Southampton.

Many won't because they think that the landlord will simply refuse to rent to them if they do.

There are lots of incidents that have been revealed of landlords providing fake EPCs. How many tenants would recognise a fake?

7 years ago

Graham, you have missed the point here. Regardless of whether tenants ask to see an EPC, the Landlord has a legal obligation to obtain one.

If you are the type of Landlord that cant be bothered to obtain an EPC, them it is likely that you wont be bothered to protect the tenants deposit or provide a CP12. Any tenant in their right mind would stear well clear.

As for "Fake EPCs", there are a handful of cases out of the 6million EPCs produced. Anyone that has ever gone to the trouble of trying a alter a pdf. file will know that it is easier said than done.

EPC Choice

matchmade

7 years ago

Most sensible people resist so-called free solar installations because they know that the vast majority of feed-in tariff returns will just go to the installation company, who will make 12% a year for 25 years simply by effectively renting the roof space. The returns for the tenants are tiny by comparison, and the landlord gets no benefit at all.

I have EPCs on all my properties, but no tenant has ever asked to see them. EPCs are useless anyway because user behaviour is so variable and because the certificates themselves take no account, for example, of energy-saving light bulbs, which only "count" if they are 2- or 4-pin units, not bayonet or screw-fit that are in the vast majority of houses.. What's the point of the EPC if it bears no relation to the lighting setups in the real world?

I also build and sell new flats and houses. Buyers take absolutely no account of the running costs of new houses compared to second-hand ones, or the existence of the NHBC guarantee. All they are interested in is the price they pay to buy the property initially. As a result so-called zero-carbon homes are going to lead to yet more pressure on builder's profit margins, on top of S106 taxes and affordable homes: builders and developers will not be able to charge any higher prices than they would have done with the building regulations in force 20 years ago, even though modern houses are far better built.

Mark Alexander

7 years ago

Very interesting and controversial views Tony, thanks for sharing. Properties today might be better built from certain perspectives but as a result of them being so airtight to comply with regulation I can foresee major condensation and mould issues as they begin to age and get used by tenants who rarely think to ventilate their property by opening windows.

John Plumridge

7 years ago

Your right the major financial benefit is with the company that pays for the system but an average saving of a third on your electricity bill for the tenant is not insignificant. The landlord gets the warm glow of contentment in knowing they are helping to save the environment (stop laughing!) . Maybe I should have asked why more landlords do not purchase solar systems to go on their roofs if you can get a return of between 8% to 12% indexed linked for 25 years? We can arrange the install of purchased systems to if you were wondering.

John Plumridge
http://www.curtisplumstone.com
jplumridge@curtisplumstone.com
02392 696815 / 07779 756213

Mark Alexander

7 years ago

That was a cheeky bit of advertising John. I've just searched our Directory for Suppliers of Green Energy and I can't find you. Why not get yourself a Gold business member profile there and testimonials from your existing client?. Let your clients do the selling for you. You could then link your comments back to the Testimonials on the Directory.

7 years ago

@Tony: The purpose of EPCs is not to tell tenants what they should expect to pay by way of energy bills but to enable them to compare the relative energy efficiency of different properties on a level paying field. It's exactly the same as MPG figures for cars: no one actually expects to achieve the petrol consumption figures advertised by the manufacturers because no one drives in the same way. It is, however, the only way of comparing vehicles like-for-like.

On the subject of lighting, sorry but you are totally wrong there. The way in which the light fitting is designed is irrelevant. It doesn't matter if light bulbs plug in, screw in or twist in, 2-pin or 4-pin, they all count. What IS counted is the number of fitting, not the number of bulbs and that can be a bit contentious. However, they do count, all of them, except removable lamps, the sort that the owner is permitted to take away with them and must not leave behind as a "Fixture and Fitting".

As I said previously, tenants and property buyers are their own worst enemies when they don't ask to see the EPC. However, I commend you for having them done and not trying to flout the law.

matchmade

7 years ago

The tenant might therefore save about £140 a year, which I agree is not insignificant, but equally I don't think it makes much difference: the main issues for tenants are the rent, the location and general acceptability of the property's decor, its liveability. Tenants ask about the overall level of bills but £10 a month is nothing special.

I agree FITs make sense for landlords and owner-occupiers, but the main issue is the standard one of insufficient capital, plus the suspicion that they won't get their money back when they sell the property. It's highly likely that buyers will not be prepared to pay extra for a house with a solar panel: even if the compounded value over 25 year is pointed out to them, they will just knock the same amount off their original offer. Basically they will just want the solar panel for free, as they would expect to get a boiler that's only 1 or 2 years old, or a new kitchen, etc. included in the overall price. The fact that the solar panel is unique in generating an income will be glossed over.

My solution to this problem for a landlord prepared to invest the capital and buy a panel, is to set up a limited company to own the panel, separate from his personal freehold ownership. When he eventually sells the house, the company retains ownership of the panel and the right to the main FIT payments for 25 years. It would be no different from E.On or whoever installing the panel for free and retaining ownership, and that way the landlord will make sure he gets full return on his capital, rather than hand it over to the new owner of the house. It's certainly what I plan to do when I am eventually forced to install panels on my new-build houses: I will keep the FIT payments for my building company, thank you, since it's my capital that bought them; I'm certainly not going to see improved sale prices on these "green" houses.

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70% of renters not planning to buy