As environmental concerns creep up the priority list of tenants and buyers alike, the latest report from Hive and Rightmove is just the latest to show the long-term benefits of offering eco-friendly properties as a landlord both in the short and long term.
While there will be some landlords quick to dismiss news of eco-consciousness as post-Greta propaganda, there are robust studies (including this study of Australian renters) dating back to 2015 which indicate a growing environmental concern in tenants, followed by research in 2018 from Your Move which showed that 42% of tenants expressed that environmental issues influenced their property decisions, and further research from Centrica in July 2021 which found that upwards of 90% of 2000 surveyed in Scotland believed that carbon neutrality was important to them.
What this means for Wirral landlords
Environmental concerns are likely to grow in importance over time – especially as various Paris Climate Accord deadlines approach and global awareness is raised. However, while competition between landlords to offer the most environmentally friendly properties may be some way off, there is a more immediate benefit in being able to offer a property with a higher-than-average level of energy efficiency.
While current governmental legislation has required a minimum band-E EPC rating since April of 2020, there are clear benefits to the tenant from a better rated property – and with the relaunch of the UK government’s ‘Green Deal’, there are methods of making improvements to the property which are tied to the improvement itself rather than the landlord.
There are also reasons to believe that the minimum requirement for the EPC will increase to band-C from 2025 (for new tenancies and from 2028 for existing tenancies). As such, landlords may be faced with needing to improve from E to C with little notice, making it necessary for landlords to make large investments in their properties. As such, it will benefit landlords to begin the process now in order to take full advantage of the intervening 4 years.
While there are also calls for the government to introduce a replacement to the previous LESA (landlord energy savings allowance), there have been no indications that this will happen in the short term – though these things tend to have some limited allowance for backdating, so may well retroactively cover improvements made in the coming years.
The possible options for property owners go further than new insulation or heating systems, however, and there are and increasing number of ways that property owners can go above and beyond when it comes to making a difference. For example, a spokesperson from British Gas – parent company of Hive – had this to say:
With the ban on new petrol and diesel vehicles on the horizon, many people are considering how to make the switch to electric. And as we head towards net zero, it’s likely that smart charging as part of a wider home energy eco-system, will increasingly become the norm, as people look to make homes more sustainable.
What should Wirral landlords do?
There is no legal requirement for landlords to act immediately, nor is there any firm data on the impact of environmental friendliness on void-time or rental expectations. However, legal requirements for rental properties are certain to become more stringent over the next five years and early indicators suggest that environmental considerations are of growing importance to tenants.
For this reason, we would suggest that it is better to begin the process of improving your portfolio’s EPC ratings sooner rather than later to avoid being faced with a large one-time outlay or the possibility of what, according to the consultation document which outlines the 2025 deadline (amongst other things), could be a £30,000 fine for non-compliance.
Landlords, like the rest of the population, are familiar with the dangers of climate change – but have historically had to make business decisions on various improvements – however, as the regulation becomes stricter and the options more widespread and less expensive (and with the previously mentioned Green Deal and other incentives such as the Domestic Renewable Heat Incentive available), landlords can be increasingly confident that their business and environmental concerns are aligning.
Need help sourcing an EPC or finding the right partners for improvements? Contact Us today to talk to one of our expert team and see how we can help you to get ahead and stay ahead of regulations – environmental or otherwise – and help to take the pain out of portfolio management.