Energy efficiency standards for homes are changing. As part of its ongoing efforts to achieve carbon neutrality, the UK government has announced new energy efficiency standards for homes. While ambitious energy efficiency standards were established for new homes and offices at the start of 2021, ministers recently announced that all homes will be expected to meet new energy efficiency standards by 2035.
New legislative changes will require all properties to be at grade C or above on their Energy Performance certificates by the middle of the next decade. This will require many homeowners to make renovations to bring their properties up to scratch. However, landlords face an even more challenging timescale. Here, we’ll look at everything homeowners need to know to ensure that their homes and investment properties are compliant by 2035.
What help is available for landlords to improve their Energy Performance Certificate?
If you’ve had to rent or sell a property in the last decade, you’ve almost certainly needed an Energy Performance Certificate (EPC). This is a document that provides an objective assessment of how much energy a property uses, and what can be done to improve its energy efficiency. It uses a simple grading system with A being the most efficient and G being the least.
The National Residential Landlords Association has called for greater government assistance in helping landlords to reach the new minimum energy efficiency standards in time for the 2035 deadline. A measure that will require landlords to spend an average of £4,700 per property. Given that the average net annual income for private landlords falls short of £4,500, it’s clear to see why this is a point of contention for landlords.
Why will you not be able to rent homes below level C?
At the time of writing, landlords are expected to keep their properties at an EPC rating of E or higher. However, by 2035 landlords will be expected to achieve a rating of C or higher.
The estimated cost of upgrading a property with an EPC grade of D to a C is around £6,472. And while these upgrades are expected to reduce tenant’s energy bills as well as reducing the property’s carbon footprint, there is still no significant financial incentive for landlords to make these improvements. With estimated annual savings at around £179 it would take decades for landlords to achieve a return on this investment.
What’s more, the Green Homes Grant, which could be used to offset the cost of energy-efficient heating and insulation investments, is closed to new applicants as of March 2021. Nonetheless, there is still support available to landlords and homeowners who want to improve the energy efficiency of their properties.
If you own an investment property, or are considering letting out your home in the future, we’ll take a look at what you need to do to achieve an EPC grade C and the support available to offset the upfront cost.
What should landlords do by 2035?
A recent poll by the buy-to-let arm of Nationwide revealed that 35% of landlords surveyed were not confident that they could bring their properties up to the required standard. As well as concern about the costs associated with upgrading their properties, many landlords were unsure just what they needed to do to achieve an EPC grade C.
In order to achieve this, a landlord’s priorities must be to:
- Identify and address sources of energy waste and inefficiency (i.e. heat loss)
- Consider alternative heating methods to gas boilers
- Make upgrades to improve thermal efficiency within the property
Why are homeowners struggling to reach energy efficiency?
While it may be easy for owners of newer properties to achieve energy efficiency, older properties are prone to certain inefficiencies by virtue of the materials they are built with. These properties account for a significant proportion of rented properties.
According to the English Housing Survey, a third of all privately rented properties in the UK were built before 1919. This makes them the most common age bracket. Furthermore, 4 out of 5 properties of this age have an EPC rating of D or lower.
What can you do to make your property more energy-efficient?
Even if you are living in an older property, there are measures you can take to make your property more energy-efficient. If you’re not sure where to begin, you may want to look at your most recent EPC, which can be found on an open source national EPC datebase. This will give you an overview of your property’s current energy efficiency and what you can do to improve it.
However, if you have not had an EPC inspection recently, some recommendations may include:
1. Install a smart meter
A smart meter won’t make your property more energy-efficient in and of itself. However, it’s a worthy addition to your property for several reasons. Firstly, it ensures that energy bills are accurate as energy usage data is transmitted directly to the supplier with no need for manual meter readings. This eliminates wasteful spending on estimated bills.
Secondly, it allows you to gain a greater understanding of which appliances in your home are consuming the most energy, and to more accurately judge the impact of energy-saving measures you may wish to install.
Thirdly, your energy supplier will install a smart meter for you absolutely free of charge. And as long as it’s a second-generation SMETS 2 smart meter, it will remain fully functional if you switch energy suppliers.
2. Replace your windows and improve your insulation
Heating costs account for 47% of the average household’s energy bill. So it goes without saying that tackling heat loss should be a high priority for landlords.
Upgrading roof insulation, installing cavity wall insulation and replacing your windows can make your property far more thermally efficient. Upgrading windows and doors is also beneficial. Don’t make the mistake of assuming that all double-glazed windows are equally energy-efficient. Windows can lose their thermal efficiency in time, requiring them to be re-sealed or upgraded.
3. Replace your boiler with a heat pump
As boilers get older they become more prone to inefficiencies. If your radiators aren’t getting as hot as they used to, or take a long time to heat up this may be a sign that your property’s boiler is on its last legs.
Upgrading your boiler to a modern greener alternative such as an air or a ground source heat pump could drastically improve the rating on your EPC.
4. Install solar panels
As well as combating energy waste, private landlords may want to find ways to generate their own 100% renewable energy. PV solar panels currently generate energy for around a million homes across the country. These can supplement the energy your property uses from the national grid, driving down both your property’s energy bills and carbon footprint.
What’s more, your energy supplier will buy back any unused energy generated via the Smart Export Guarantee.
To get maximum value from your solar panels, you may wish to supplement your system with battery storage technology to store electricity for when you need it, and to provide flexibility services to the local electricity network.
What support is available to you?
Until recently, the Green Homes Grant was a source of financial relief for landlords and owner-occupiers. This provided vouchers to cover up to 50% of the cost of eco-friendly insulation and heating.
However, the Green Homes Grant is unavailable to new applicants as of March 2021. While this is a source of disappointment for many landlords, there are alternative schemes that can help to offset the cost of energy-efficient home improvements.
Renewable Heat Incentive
The Domestic Renewable Heat Incentive (RHI) has been around since April 2014. Over time it can help to mitigate the cost of installing eco-friendly heating technologies like solar water heaters, biomass boilers or air / ground source heat pumps.
Under the scheme, quarterly payments are made for 7 years as long as you abide by the terms of the scheme. How much you receive depends on the amount of renewable heat your installation generates.
Boiler Upgrade Scheme
Finally, the Boiler Upgrade Scheme (BUS) will come into effect in the spring of 2022. This scheme is administered by the energy watchdog Ofgem and will offer grants to property owners to offset the cost of heating installations that don’t use fossil fuels.
This new scheme will replace the Renewable Heat Incentive, offering an upfront grant of £5,000 rather than quarterly payments.
Partnering with BHESCo to achieve your EPC improvement goals
To identify opportunities for improving the energy efficiency of a property it is vital to gain a thorough understanding of energy demand and consumption patterns.
It makes no sense to begin installing solar panels, heat pumps, or battery technologies until every effort has been made to minimise heat loss and energy waste.
For this reason, a bespoke BHESCo energy survey should be the first phase of any planned building improvements, underpinning every other stage of your future energy performance strategy.