The rise of energy efficient rentals: A win-win for Landlords and Tenants

With increasing awareness of environmental concerns and a push towards sustainability, more landlords are taking proactive steps to upgrade their properties to meet higher energy efficient standards. But what’s driving the shift, and what do tenants have to say about living in these eco-friendly homes? 

Government regulations and the push for higher standards 

The current regulations set by the government require rental properties to meet a minimum energy standard of E or above. There has been a lot of talk recently of this increasing to C. Some of our landlords have taken it upon themselves to raise the bar, not only to comply with regulations but also to provide top-notch accommodation for their tenants. 

Tenant perspective: The comforts of eco-friendly living 

We have taken the opportunity to sit down with Andrew, a tenant who has been residing in an eco-friendly property for three years. The renovations to the property included internal wall insulation, a suspended floor to allow floor insulation and upgraded heating system. 

Exeter Property - How important was the energy rating of the property when you were looking for your next home? 

Andrew - The energy rating was definitely considered and taken into account - I wanted to live in a property where it would be cost effective to heat and well insulated especially for the winter months.

Exeter Property - Have you noticed any financial benefits from living in an eco-friendly property? 

Andrew - The main financial benefit of living in a well-insulated eco-friendly property is the reduced gas usage required for heating.  At a time of rising cost of living and high energy bills any savings are very appreciated.

Exeter Property - Have you encountered any challenges or drawbacks associated with living in an eco-friendly property, if so how have you overcome them?

Andrew - I haven’t noticed any drawbacks or challenges living in this property.

Exeter Property - Are there any specific initiative in the property that you particularly appreciate or find innovative? 

Andrew - The main thing I appreciate is how well insulated the property is, I rarely have to run the heating for more than an hour or two per day during the winter, which is enough to keep the property warm even on particularly cold days.  I also like the insulated flooring which maintains heat throughout the year.

Landlord Insight: Motivation and challenges 

To gain further insights, we spoke with Chris, the landlord of the property Andrew resides in. Chris outlined various motivations for retrofitting properties to improve energy performance ratings. These motivations ranged from social responsibly to futureproofing. Chris also highlighted some challenges, such as the lack of reliable advice on retrofitting and the cost associated with certain improvements. 

We have various motivations to retrofit our properties to improve their Energy Performance Rating, I would list these as:

1. We believe we have a social obligation to provide our Tenants with a comfortable home with reduced heating bills and in a good state of repair.  This of course extends to ensuring that all aspects of letting our homes is to the best of the standards we and Exeter Property can achieve.
2. Future proofing our properties.  At some, as yet unspecified, date the government proposes to ban letting properties that do not achieve an Energy Performance Certificate (EPC) level C.  If our properties need to be upgraded anyway – why not as soon as possible.
3. We can expect a good market rent for our properties with less frequent tenancy changes, as better stable Tenants will realise the advantages of living in a home that is compliant with the best standards.
4. Where the fuel bills are included in the rent there is a saving on our costs for heating the home after they have been retrofitted with appropriate insulation, windows, doors and other energy enhancing measures.
5. In the future many landlords will realise that it is not cost effective to insulate their properties to EPC level C and will sell up, as they will no longer be allowed to let properties with a lower EPC rating.  This will decrease the rental properties available and will increase rent levels for the compliant accommodation that remains.
6. We are in the privileged position to have bought our properties some time ago and have the finance available to carry out the retrofit works.

In our experience upgrading existing properties to an enhanced EPC rating is not cost effective.  The value of the property and rent levels are not increased sufficiently to cover the costs of the retrofit.  The loss of rent through the void period when the retrofit works are carried out should also be factored in.

I have not been able to find any source of reliable advice on how to go about retrofitting a property.  I have relied on my own research, knowledge and instinct.  There does not seem to be any help or support from the government.  Where we have paid for advice and a retrofit report from a consultant, the result has been disappointing.  

We have looked into and dismissed the installation of heat pumps and photovoltaic panels.  Not only are heat pumps expensive to install, we are not satisfied that they will adequately heat our properties.  Our Tenants will not experience any reduction in the running costs of a heat pumped heating system compared to a gas boiler central heating system.  There are potential complications with heat pumps as to where they can be sited, where the pipework is to be routed, increased radiator sizes and where hot water cylinders are to be located in the property.  PV cells need to be sited in specific roof locations and the battery backup would take up floor space.  We have decided that a photovoltaic installation does not currently make technical or economic sense.

The future of energy-efficient rentals  

As the trend towards energy efficient rentals continues to gain momentum, it’s clear that both landlords and tenants stand to benefit. For landlords, there’s the promise of reduced vacancies, stable tenancies, and long-term cost savings. Meanwhile, tenants enjoy lower utility bills, increased comfort, and the satisfaction of living in a sustainable home. 

While challenges and uncertainties remain, the shift towards energy efficient in the rental market represents a positive step towards a greener, more sustainable future for all involved. As landlords and tenants alike embrace this trend, the benefits of eco-friendly living are poised to become increasingly accessible and widespread.