What do changing EPC and heat pump requirements mean for the PRS?

What do changing EPC and heat pump requirements mean for the PRS?

15:07 PM, 9th November 2021, About 3 weeks ago 46

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Hi, my name’s Melissa Lawford, I’m the property correspondent at The Telegraph. I’m writing an article about what changing EPC and heat pump requirements mean for the buy-to-let sector.

I want to hear landlords’ thoughts on what the extra costs of upgrades will mean for them. Are you concerned about how expensive these works could be and/or do you have opinions on the effectiveness of heat pumps? Could the plans to introduce these new requirements affect your investment decisions or encourage you to sell up?

If you could spare 10 minutes for a quick chat or would like to share your story, please email me at melissa.lawford@telegraph.co.uk or call me at 07936135425.

I need to file this specific story by lunchtime on Wednesday, so ideally anything before then would be brilliant, though if anyone misses the deadline I would still be very interested to speak to them!

Thank you so much for your help,

Melissa



Comments

by blair

7:47 AM, 10th November 2021, About 3 weeks ago

Melisa
I am familiar with them in NZ. They are very popular there for sure and cheapest option. For the UK there are issues
1 In NZ they heat/cool air that is blown/spread by the fan from the unit. Normally there is just one unit. Each unit needspipework and drainage To only have one fan wouldn't be enough as its much colder here
2 they are noisy
3 they need a outside wall and air. The external walls are usually owned by the LL not the lessee
4 they usually do both heat and cooling. But if people start using them for cooling the higher demand will put a lot of strain on the electricity generators. ( this would be particular so in buildings with lots of west facing glass and poor insulation
5. They will heat the hot water too ( not usual in NZ) but you will need a cylinder
6 Question if there is enough temperature differential especially if external air is bellow zero. Ground source heat pumps would still work but expensive to install.
7 Will there still be gas for cooking ?

Not much help but issues I would be interested to know how they will be sorted here.

by Dr Rosalind Beck

8:18 AM, 10th November 2021, About 3 weeks ago

Hi Melissa
A big question is how will landlords be able to definitively work out what work will bring their energy rating to a C. This is by no means clear. They could spend a lot of money only to miss the C rating by a point or more. Also, who on earth will do all this work? Where are the tradespeople to do this and how will they sort out 3 million homes in a short space of time? What will they charge - since they will know they have landlords over a barrel? If landlords can't do the work in time then what will they do? Evict their tenants or face huge fines? What if they can't get possession of their properties and the tenants out in time - especially given all the additional obstacles the UK governments have put in their way? One could have a rogue tenant who won't leave putting the landlord in the position of facing a huge fine for housing them without a C rating. I'm sure others can add to this huge range of problems that the Westminster Government seems to be oblivious about or frankly, just don't care about.

by Luna

8:34 AM, 10th November 2021, About 3 weeks ago

I for one will be selling the bulk of my buy to let portfolio as a result of the proposed introduction of heat pumps and the EPC requirement to reach C.
Heat pumps are a non starter due to the expense and for all the reasons outlined above. They are inefficient, cost a fortune to run and repair and when you need heat the most in the winter, they struggle to heat the rooms. I would say they will only produce background heat in the bulk of uk homes. They work in other countries for new builds which have masses of insulation, solar panels, triple glazing and underfloor heating, which unfortunately, most UK homes do not have.
The EPC rating of C has so many problems for landlords - there is no guarantee a C rating will be achieved, even after spending thousands on the work.
The tenant will have to vacate the property in order to do all the wall insulation required, so no rent coming in but the mortgage will still have to be paid. If a landlord has multiple properties or a single buy to let, the costs are prohibitive.
If this is made law, I foresee a mass exodus of landlords from the market.

by Bryan Smith

8:50 AM, 10th November 2021, About 3 weeks ago

Melissa,
I am just doing a property strip down and remodel. It had no gas supply so the alternative was heat pumps or storage radiators. Heat pumps were not suitable due to floor conditions and height restrictions on the conversion. They were also very expensive to install and run according to the suppliers we discussed this with. Cheaper and more efficient option was to install a gas supply and run a high efficiency gas combi boiler. These boilers are 90%+ efficient compared to very low efficiency of heat pumps. On the EPC front, I question what the criteria is and who sets this. Installing LED bulbs is a big plus on the EPC but is insignificant against insulation or double/triple glazing? They also do not apply to some buildings. The system needs major overhaul. Finally, why the PRS sector is always being targeted. A lot of social housing is appalling. Plus if the Government is committed to renewables then why are the 2000+ houses being built around my area right now have no heat pumps, no solar panels and no water recovery systems. Builders making a mint again and yet building regs do not force them to install renewable energy. The excuse is it would be too expensive. Yes, we landlords know!

by Martin

9:13 AM, 10th November 2021, About 3 weeks ago

I am in the fortunate position that all of my houses are currently rated C or above. However it seems quite simple to me what the largest effect will be. Ultimately rents will increase.
If you are a professional landlord and your living comes from your business, when operating costs rise, as with any business these get passed on to the end user. In this case the tenant.
I operate with the philosophy that empty houses cost money so I price my houses so they are the cheapest of that size and condition in the area.
Each time Landlords have been hit with an extra cost I have seen a rise in rents in the ensuing months.
I don't lead with the rent increase but I certainly follow.
Where is the sense in letting a property for £950 pcm when every other similar property is fetching £1000 pcm. Especially when your operating cost has risen by £500 - £600 per year for that property.
More alarmingly though in the areas I have properties I am now seeing a lack of availability. I don't know for certain, but is this indicative of Landlords selling up and leaving? If that is the case then there is a huge problem looming.
One of the companies I have dealt closely with for 15 years currently has just 9 rental properties available across 2 offices in 2 towns today. They have let the last few properties of mine within days of them going on the market at full asking price.
This is very much a if it looks like a duck and sounds like a duck - it is a duck!
The obvious conclusions are the correct conclusions - higher rents and fewer landlords.

by Accommod8

9:53 AM, 10th November 2021, About 3 weeks ago

A key improvement to get the EPC rating transformed is either external or internal insulation.
For external, full scaffolding is required at probably, on average, around £1200 plus vat. Window sills must be extended, and all fittings such as security lights, satellite dish, alarm box, hanging basket brackets (if any), downspouts, outside tap etc., must be removed, extended and refitted.
Then there's the potential to easily damage the finished rendered surface, such as a scaffolding pole when dismantling, penetrating the thin render, causing damage from the start.
Internal wall insulation is easier, but is highly problematic according to room shape, skirting board detail, coving detail.,room size reduction for small areas, and probably requires the property to be vacated, so a question of probably causing or extending voids between tenancies. Without grants, these investments could cost 10-15% of the value of, for example, many 2 and 3 bedroom houses in certain areas of Northern England. What is the incentive, apart from a reduction in fossil fuel use, for landlords to spend years worth of rental income in many cases? It may be the trigger to sell.
(there remains the debate about moisture entry and condensation post installation too).
Therefore significant landlord grants are critical.
Air source heat pumps avoid huge excavation or boring costs which are essential for ground source ( unless you're lucky enough to own a lake at your buy to let property), and many properties don't have the space to do it.
It's also the huge additional cost of sizing up radiators; removing and replacing undersize micro-bore pipes throughout. This is because most older houses are not suitable for under floor heating, which is how heat pumps best operate. Having space for a plant room; checking the external pump fan decibel level for neighbours (and tenants) are more considerations.
By the way, I wonder to what degree Insulate Britain understand these practicalities?
Accommod8 Ltd.
(please post further comment if/when your article gets published to inform us)

by Accommod8

10:04 AM, 10th November 2021, About 3 weeks ago

Just to add that many houses don't have a wall cavity, and if they do, it may be of inadequate depth, plus some reckon cavity wall insulation causes moisture issues.

by PJB

10:09 AM, 10th November 2021, About 3 weeks ago

Heat pumps are only effective when there is a significant difference temperature between the inside and the outside air or ground temperature. In summer, the system is superbly effective, in spring & autumn, it is reasonable and in winter it will be time to turn on the electric fire!
The use of heat pumps are be prohibitively expensive in terms of cost of manufacture, installation and maintenance. The manufacture is not eco-friendly. Installation will require removal of the old boiler if there is insufficient space to keep it, upgrading the existing central heating radiators and infrastructure pipe work to deliver the lower temperature CH water around the property requiring much more insulation which may be impossible in less modern housing stock. Maintenance will also be an issue in that there are two motors, refrigerant and devices to stop the outside heat collector from freezing up in cold weather.
Heat pumps may have a place in city centres where the air is warmer but not otherwise. As landlords, we are contracted by law to provide access to a reliable source of heat and hot water at all times. So don't get rid of the gas boiler just yet!
Sustainable energy production solutions are becoming quite prolific. The problem now is how to store wind or solar power for use when demand needs it. Again, there appear to be many solutions in development some of which could be with us on a large scale within the next few years. When this happens, on-demand electricity will be available to off peak power to intelligent domestic electric heating systems. In the meantime, work continues to develop a carbon free gas replacement, with the same calorific value, to serve the existing gas boilers up and down the country of which there are very many. At the moment, hydrogen as a gas replacement is not viable. The energy concentration is too low and would need to be compressed to unacceptable pressures in the gas distribution network. There is promising work in the USA to chemically attach and detach hydrogen to another molecule by the use of light.
In short:
 Heat pumps are NOT a good idea for tenancies.
 On current predictions, sustainable electric power at a competitive price point may the way forward in the medium term. It should be possible to interact with the power providers moment by moment to get the best price for their electricity and the tenants heating.
 Wait for a suitable national carbon free gas distribution. This is where development is need most.
Until there is a clear choice to be made, I am sticking to gas.

by Old Mrs Landlord

10:23 AM, 10th November 2021, About 3 weeks ago

A major problem is that EPC ratings are based on the most efficient system in terms of running cost to the occupier. This conflicts with the aim of sustainability as gas central heating will always be the cheapest as long as the gas versus electricity price per unit differential is maintained. The entire EPC rating system is flawed in several respects as far as eco-friendly running is concerned and needs a radical overhaul before landlords rush to install gas combi-boilers wherever possible.
Of course, that's before we start thinking about the many old stone-built, lime mortar solid wall mansions which have been converted into flats where installation of insulation and removal of chimneys prevents the building from functioning as designed and results in damaging condensation and mould, with eventual structural damage to the fabric of the building.

by Darren Peters

10:37 AM, 10th November 2021, About 3 weeks ago

From what I've researched so far I think that heat pumps will be the next diesel debacle. Ie the government encouraged a move to diesel for environmental reasons then changed its mind and made diesel the environmental bogeyman at the public's expense. I think this will happen with heat pumps.
It will be difficult to fit heat pumps to high density blocks of low or high rise flats. These will require air pumps rather than ground pumps and what, one per flat hanging off the external wall whirring away? If you're thinking of changing from existing individual heating to communal block heating to stick one big pump somewhere who pays for what? Freeholder? Leaseholder? Is it even possible without legal wrangling between parties?
Even if you only worry about houses with gardens big enough for a ground pump there is still the need to enlarge the radiators or fit under-floor heating plus insulate the building somehow. Retro-fitting internally takes up space and externally risks the insulation becoming damaged.
Once you've done all the adapting, making existing housing stock as suitable is possible, heat pumps in the UK will need to be topped up with electric as they can't get the water hot enough by themselves. Unsure of reliability or lifespan or service costs for heat pumps in the UK, there probably isn't enough data for our damp climate but I wonder how much electricity on average will be required in reality; 10%, 25%? Electricity is a very wasteful way to generate heat.
They seem to be a great idea for a new build property or development where everything can be contorted to work to the benefit of heat pumps but there's no reason why new builds couldn't be required to be built 'heat pump ready'. Eg extreme insulation, black wall passive solar heating (trombe wall), oversized rads or underfloor heating. Even if these buildings didn't have heat pumps they would make a massive energy saving using gas or electric.
Long ranty post short, legislating for this will not make it happen, there will be no business case to invest the money in _existing_ properties. Or to put the same thing into a social context, local authorities will also struggle to make this work as they won't have the money and will have to take homes out of circulation while they are converted.

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