Landlord Guide: Why Energy Efficiency is Still Important

EPC Requirements for Landlords

Introduced in 2021, new EPC requirements for landlords were to reach a C rating or above by 2025 for new tenancies and by 2028 for existing tenancies. However, the government scrapped this proposal in October this year. Currently, the EPC rating for letting is a minimum of E and will remain so for the foreseeable future.

This comes as welcome news for most landlords and investors. However, despite this change, a survey from Hive proves that most people still see the importance of greener homes. 55% of those surveyed believe that making properties energy efficient is something everyone must think about, while 47% have already been making the necessary changes to make their properties more sustainable and greener.

Before this EPC rating for letting was scrapped, many landlords were making such improvements ahead of 2025. According to Shawbrook Bank, 4 out of 5 landlords have begun energy efficiency improvements on their existing property portfolios. 30% of these landlords have claimed to have already achieved EPC ratings of A-C. However, landlords already improving energy efficiency in their properties should not be disheartened by the U-turn.

While the government has scrapped this proposal, they remain committed to the Minimum Energy Efficiency Standards (MEES) and ask landlords and homeowners to ‘upgrade energy efficiency where possible’. Doing so aids the country in reaching net zero by 2050 while improving living conditions and energy bill savings for tenants. Not only that, but such properties will always be in high demand in the rental market and worth far more.

Demand

Rental demand is far higher for an energy-efficient home than the opposite. Because of this, many young professionals search for new homes due to being built to a higher specification. They are built with more up-to-date designs, like insulations, newer heating systems, and the latest appliances. What is more, due to better heat retention, energy bills are much lower.

EPC ratings are much higher in newer builds, and tenants can offer up to 20% more than the market price to secure them. If a landlord improves the energy efficiency of their buy-to-let property, it increases the quality of the tenants and makes the property stand out in such a competitive market.

Better Quality of Life

While saving money and finding the perfect tenants to fill the property is important, keeping the tenants is even more so. Due to the demand for energy-efficient properties and the improved quality of life they provide, residents are more likely to extend their tenancies. This higher retention rate of tenants means landlords will experience far fewer void periods.

What is more, providing a better home makes happy tenants. Fewer things go wrong, like maintenance issues, and landlords can sit back and keep generating passive income. Making such energy improvements also increases renters’ rights, which works towards the Renters’ Reform Bill recently addressed in the King’s Speech.

Improve Insulation

On Hive’s list of energy efficiency most desirable to tenants, insulation is second. Insulation does not just improve a property’s energy efficiency and heat retention, it also reduces noise levels, which creates a far nicer home for tenants – especially in apartments.

Improving the insulation of a property makes it overall much cheaper to heat. Even by simply installing an insulating jacket on hot water tanks and pipes, Energy Saving Trust reveals that a total of £70 a year can be saved on energy bills.

Upgrading windows to double or triple glazing, ensuring there are cavity or solid walls, as well as loft and roof insulation – and even small improvements in draught-proofing – can make a large difference in energy efficiency, and all the difference in making a house a home.