Sep

Opinion: landlords, get your priorities right in these times of sky high energy prices

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There’s a changing of the guard at the palace with the sad passing of our beloved Queen, and at Number 10 with Liz Truss’ new team.

With Truss, a qualified chartered accountant, and chancellor Kwasi Kwarteng, a PhD in economics from Cambridge, between them they should be getting the numbers right – and by all accounts they will need all the arithmetical powers they’ve got to do that in the present economic climate.

As the country leaves behind the incessant Number 10 controversies, Truss’s staid accountant’s world, contrasting with the previous incumbent’s, it should give investors confidence that she knows how to tackle an energy crisis, a crisis brought on by the biggest European war since WWII.

Insulating makes sense

But is seems an oversight to me that the government’s proposed policies of tax cuts and energy subsidies miss the low hanging fruit of improving housing insulation.

I certainly don’t agree with their methods, but the Extinction Rebellion drive to improve home insulation makes a lot of sense when according to The Department of Business, Energy and Industrial Strategy, one-third of all those homes with a loft don’t even have loft insulation. And a goodly proportion of these will be rentals.

You really don’t need to be an accountant to work out that heating a home at great expense and having that heat disappear quickly through the roof, walls and windows, in a poorly insulated home, is seriously uneconomic. Not only that, it leads to health problems when tenants cannot afford to heat their inefficient homes properly.

There’s nothing planned as I can see to to replace something like the Green Homes Grant that was cancelled last year. This would pay up to two-thirds of the cost of simple improvements that could be very cost effective in saving energy – draft proofing, fitting energy efficient boilers, thermostats on radiators, low energy light bulbs, wall and underfloor insulation, as well as loft insulation.

In fact even without Government help, fitting basic insulation and other measures can easily be tackled by most landlords, home owners and even tenants by applying very basic DIY skills. The payoff is out of all proportion to the cost of the materials.

A new Green Homes Grant scheme, even a simplified one, could perhaps be more cost effective long-term than the money that will be pored into keeping the wholesale cost of gas and oil down. Such a scheme like that should not be beyond the capabilities of a good accountant, and preferably a scheme that avoids the profiteering that often accompanies such Government initiatives.

Old property stock

Much of the rental property stock in England is older and often poorly insulated, much of it with single brick or solid masonry walls. These properties are inherently inefficient and expensive to heat compared to a modern home with cavity wall insulation, underfloor and loft insulation, as well as double or even triple glazing and an energy efficient heat source.

A government drive to improve the country’s housing stock in this way would not only help the government achieved its energy saving and environmental targets, it would drastically cut down on energy usage at a time of extremely high prices – it would improve people’s lives at comparatively low cost, and might just cut down the huge energy subsidies we are now expecting.

Improving lives

As a landlord you should want to improve the lives of your tenants and well as the energy efficiency of your property, indeed further down the line you are likely to be compelled to do so. Most properties will be targetted to reach EPC grade C by around 2025 when a new Act becomes law.

Government financial help or not, and an energy crisis or not, the objective is still to increase energy efficiency and achieve the Government’s committed net-zero carbon targets. A big part of that will be a drive for greater energy efficiency in peoples’ homes. All newly rented properties will require an EPC of at least Band “C” when the Minimum Energy Performance of Buildings (No. 2) Bill becomes law.

Then, the proposal is that all existing tenancies will have until 31st December 2028 to reach this new target. For most properties this target should be achievable by practical, affordable, and cost-effective upgrades that could if necessary be largely implemented by simple DIY improvements. The fines for not having a valid EPC will be increased from £5000 to £30,000.

These new measure are expected to come into effect this year, though given the current situation in Parliament, this may get delayed. But what’s more, The Renters’ Reform Bill white paper currently under consultation includes measures to deliver on the Government’s levelling up housing mission to halve the number of non-decent rented homes by 2030.

Decent Homes Standard

This will require privately rented homes to meet the Decent Homes Standard for the first time. This is intended to give tenants “safer, better value homes and remove the blight of poor-quality homes in local communities.”

We’re not there yet, but these measures will come down on landlords that don’t make the effort to bring their rental properties up to modern standards. Tenants will be given the power to claw-back their rent payments if they are deemed to be living in sub-standard conditions.

Incentivise improvements

My argument is that the Government should seriously consider incentives to encourage landlords to improve standards in their properties right now. This would be highly cost effective because of the energy it will save – far better to insulate and save the cost than subsidising wholesale prices of oil and gas, energy usage which will go through the roof.

If you know your properties need improvements, why not start planning to carry out the work sooner, rather than later.

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