Thursday, 25 March 2010

Energy Efficiency. How does this affect me as a landlord ?

Belvoir Andover Lettings, whom rent and let properties, homes, houses, flats and apartments in the Andover, Ludgershall, Whitchurch and Tidworth areas of Hampshire have identified that The Department of Communities and Local Government and the Department of Energy and & Climate Change published a document on 2 March 2010 called "Warm Homes, Greener Homes: A strategy for Household Energy Management."

This document sets out the Government's strategies and plans for how to help both tenants and home owners to not only make houses more energy efficient but also how each household can produce their own energy. In the Climate Change Act 2008 the Government committed itself to reduce carbon emissions by 80% by 2050. "Warm Homes, Greener Homes" published now is one step to achieving this goal. In this particular strategy the Government aims to cut emissions by 29% by 2020.

Quoting directly from the new strategy paper on the Government's aim as follows:
  • every home, where it is practical, will have loft and cavity wall insulation - an ambition we intend to deliver on by 2015;
  • every home in Britain will have a smart meter and display to help them better manage their use of energy;
  • up to 7 million households will have had an eco-upgrade which would include advanced measures such as solid wall insulation or heat pumps alongside smart meters and more basic measures;
  • people living in rented accommodation will enjoy higher levels of energy efficiency as landlords - private and social - take action to improve the fabric of properties;
  • there will be wider take up of district heating in urban areas, such as in blocks of flats, in new build and social housing, and in commercial and public sector buildings; and
  • there will be a core of up to 65,000 people employed in the new industry of energy efficiency, and potentially several times more down supply chains. Jobs will include installing and manufacturing energy saving measures or providing home energy advice.
The Government seeks to achieve the above by using the following four strategies:
  • New community partnerships and an enhanced role for local authorities, including a requirement on energy companies to consult with local authorities to deliver local area-based programs; and support for district heating;
  • Universal standards for the rented sector, including a new Warm Homes standard and proposals for regulation of the rented sector;
  • Invest to save, including replacing the existing CERT mechanism with a new energy company obligation, and legislation to enable pay as you save financing that would provide people with eco-upgrades without upfront costs; and
  • Support for consumers, including plans for a universal advice service and new standards for installation.
'Pay as you save' means that you will get a long term loan to make your property energy efficient. The loan will be paid back gradually through the savings on your utility bills. If the property is sold, the new owners will take over the savings and the loan.

In the document this is referred to as 'green finance' and it is expected that banks, energy companies and other financial institution will be able to offer sufficient funding for all levels of energy saving measures from insulation at a cost of a couple of hundred pounds to a complete eco upgrade at a cost of £10,000. By suggesting such an approach, it will often not be necessary for a homeowner to pay up front, as they may not have the money.

The Government acknowledges that 'imposing' these new energy measures on landlords mean that it will be costly to the landlord whilst the tenant reaps the benefits from reduced energy bills.

If this type of scheme is to be introduced for landlords the Government acknowledges that it will have to develop a variant of it that is beneficial for the landlord as well as the tenant.

They propose consulting on prohibiting the letting of properties unless the property has sufficient loft and cavity wall insulation. Such legislation would take force at the earliest in 2015.

There are concerns that people will not have sufficient knowledge and understanding in choosing the correct type of energy saving measures and also doubts about the standard amongst those selling and installing these measures. The Government will address this by improving consumer access to information and also offering tailored advice. A certification system will be introduced to make sure that certain standards are met for those involved in this industry and also measures to improve the technical understanding of energy saving measures.

Confidentiality notice
This information has been prepared for the clients and contacts of Belvoir Lettings Andover. The
information and opinions expressed in this document are not necessarily comprehensive and do not purport to give professional advice.

For more information for landlords and tenants looking for high quality service from their letting or estate agent, please contact us on 01264 366611 or email us

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