Plan your strategy for energy efficiency

EVERYONE should be doing their bit to help reduce the UK’s carbon footprint – yet is that burden being put too much on the shoulders of landlords with potential bills of £7,600+ in the next four years?

The UK has obligated itself to a legally binding target to be carbon neutral by 2050.

One of the biggest producers of greenhouse gasses is residential homes.

To hit that carbon-neutral target (as onefifth of the UK’s carbon output comes from residential property), every UK home will need to achieve a minimum grade of ‘C’ on their Energy Performance Certificate (EPC) by 2035.

Each EPC has a rating between ‘A’ and ‘G’ – ‘A’ being the best energy rating and ‘G’ the worst.

All UK rental properties have required an EPC. Yet, from April 2020, the Minimum Energy Efficiency Standards regulations have required all private rental properties to have a minimum EPC rating of ‘E’ or above.

Yet new legislation being discussed by the Government’s Climate Change Committee has suggested that landlords should increase the energy efficiency of their rented homes. Sounds fair until you dive into the details. The Government is muting the idea that all new tenancies in private rented properties should be at an EPC rating of ‘C’ or above by 2025 (and all existing tenancies by 2028).

The issue is that 66.97 per cent of all private rented properties in West Berkshire have an EPC rating of ‘D’ or below.

Some landlords will find it very expensive to improve the energy efficiency of their rented properties, especially those landlords who hold older housing stock such as terraced properties built in the 1800s.

Now, of course, you can improve the EPC rating of a terraced house by improving roof insulation, boiler replacement, solar heating, and high-grade uPVC windows.

Yet, with some terraced houses, there will come the point where you will be unable to get to the ‘C’ rating without installing external or internal wall insulation, sometimes even floor insulation.

With wall insulation costing between £5,000 and £15,000 and floor insulation around £5,000, the bill to improve all West Berkshire’s private rented properties will be a minimum of £45,442,720.

But here’s the weird part of EPCs. A rating is calculated on the cost of running a property and not the carbon output or energy efficiency.

My advice to landlords is ‘more haste less speed’. These rule changes are only a discussion paper, and it remains open for consultation until December 30.

Given that 57 per cent of private rented properties are below a ‘C’ grade, it is hard to believe the Government could achieve this without making big cash grants available.

For example, there is presently a cap of £3,500 for energy improvements that landlords have to spend to get it to the existing ‘E’ target grade on private rented homes (if you have a privately rented home at an ‘F’ or ‘G’ EPC rating, you only need to spend a maximum of £3,500 as a landlord on improving your EPC rating and still being legal even if those £3,500 don’t get you to the current ‘E’ rating minimum).

So, what are landlords’ options?

Some savvy landlords do sit down and plan a strategy for their rental portfolio.

I print off all the EPCs of their rental portfolio, look at the recommendations, then discuss a plan to ensure they are covered whatever the Government decides to make the new EPC rules.

If your agent isn’t offering that service, please drop me a line because I would hate for you to miss out on the advicethat so many landlords have already had from me.