How to create a more sustainable rental property

The Government has recently announced a new consultation on raising the minimum energy rating for rental properties from E to C by 2030. The difference between this and previous government plans is that it also proposes introducing new metrics for assessing the energy performance of buildings, based not only on the fabric of the property, but also “smart readiness, and the efficiency and emissions of the heating system”. Reducing the validity period of EPCs from the current 10 years is also being considered.

Significantly for many landlords, this proposal to change the way EPCs are calculated means that some properties already rated C or higher may require additional work to be fully compliant.

If the proposals move ahead, the new minimum standards are likely to come into effect in 2028 for new tenancies and 2030 for existing tenancies. It’s expected that transition arrangements will be made for landlords of properties that are already rated C or above.

How many private rented properties need improving to meet an EPC of C?

According to the 2023-24 English Housing Survey (EHS), around 48% of privately rented homes have an EPC rating of A-C, meaning around 2.5 million properties in the Private Rental Sector (PRS) will need improving before 2028.

• Around 14% of private rented homes still don’t have central heating
• 47% of private renters reported having an electricity smart meter – the lowest proportion out of all tenures
• Private rented dwellings also had the lowest proportion of cavity wall insulation, at 60%

A key reason for the lower level of energy efficiency is that around a third of homes in the PRS were built before 1919 and that’s high compared to the owner-occupied and social rented sectors.

So, what are the main things you should be doing to ensure your rental property will comply with the likely new rules and is sustainable for the future?

Top 7 things for landlords to do to improve their EPC rating

If your rented property isn’t yet rated C or above:

1. Make sure you have an up-to-date energy assessment. If you have made any energy efficiency improvements since the last assessment, have a new one carried out. As well as telling you the current rating, the report will also outline what improvements could be made and should include a likely cost estimate. You can find an energy assessor near you online, via sites such as Checkatrade.
   
   
2. Ensure the walls and loft are fully insulated. In an uninsulated home, around a third of heat is lost through the walls and around a quarter through the roof. So, making sure you have the best possible insulation can make a huge difference to minimising heat loss and reducing bills for tenants.
   
   
3. Install double glazing.
   
   
4. Upgrade the heating system. Ideally, there should be an efficient boiler, together with a smart thermostat that allows tenants to control when and where they have the heating on.
   
   
5. Install a smart meter. This will make it easier for tenants to track their energy usage and see where they could make savings.
   
   

And the top two sustainability features tenants want, according to a survey carried out by our umbrella company, Leaders Romans Group, last autumn:

6. Supply energy efficient appliances. Look for A++ rated refrigerators, freezers, washing machines and dishwashers, which use less energy and help you reduce both bills and CO2 emissions. Product labels are colour coded, with those in the darkest green being the most energy efficient.
   
   
7. Make recycling easier for tenants. Ensure the property has sufficient recycling bins and provide tenants with information on local recycling facilities.

The cost and benefit of sustainability improvements for landlords

Rightmove puts the average cost at around £8,074 per property. However, bear in mind that the investment you make will benefit your rental business for years to come.

Upgrading your property to make it as energy efficient as possible will certainly make it more desirable from a rental perspective, with Rightmove’s Greener Homes Report revealing that:

• 80% of tenants say energy efficiency will affect their choice of home when they next move
• 75% of tenants are willing to pay more for an energy efficient home

In addition, improvements should help protect and may even enhance the capital value, and if you can achieve a rating of A or B, you may be able to access better interest rates or special deals when you next remortgage.

If you’d like to discuss the government proposals or would like any advice on making upgrades, we’re always here to help - just contact the team in your local branch. And if your property is fully managed, remember that your dedicated property manager will be able to arrange for any works required.