Energy Efficiency: Key in the Rental Market – SevenLiving

In recent years, energy efficiency has emerged as a crucial factor in both the homebuilding and private rental sectors, with environmental targets related to housing become a common concern amongst the political spectrum.

The new Labour government have recently announced plans to make all rental properties EPC rating “C” as a minimum by 2030, putting pressure on landlords to upgrade their properties or face penalties and fines. It is also a key consideration for renters who actively seek energy efficient properties in order to keep their monthly bills down. In fact, a recent survey from Landlord Today revealed that 66% of respondents revealed they would choose a property with energy efficient features to buy or rent, over one without.

Considering this, we explore how energy efficiency has become a key selling point in the rental market and why landlords should prioritise it to remain compliant and competitive at a time where rental demand continues to grow.

How Does Energy Efficiency Keep You Competitive?

For landlords, maintaining a high EPC rating comes with its own benefits, mainly increasing the value of your property and helping to reduce maintenance costs which can be quite high, particularly in older properties.

However, energy efficiency has huge benefits for potential renters:

Rising Tenant Demand

Today’s rental tenants, particularly younger generations, are more environmentally conscious than ever before, with energy efficiency being a hot topic in response to an increased cost of living.

According to Handelsbanken, 58% of surveyed tenants say they are looking for properties to rent with an EPC rating of C, and this jumps to 88% among London tenants due to higher costs of living.

Ensuring your property is energy efficient will attract more tenants and may present a good opportunity to maximise rental yields. Find out more about boosting your rental income here.

Cost Savings for Tenants

A key factor in this increasing tenant demand are the financial benefits that comes with energy efficient rental properties.

Energy efficient appliances, proper insulation, and well-maintained heating and cooling systems can drastically lower electricity and gas use, and for tenants, lower monthly expenses. This inevitably makes properties highly attractive in a market where rental prices continue to rise.

Our energy savings guide details simple ways to improve the efficiency of your rental property. Download it here.

Enhanced Comfort and Quality of Life

As well as cost savings, energy efficient properties typically offer a higher quality of living, with smart appliances adding convenience to the tenants. Improved insulation, double-glazed windows and even quality dehumidifiers contribute to better indoor air quality and consistent temperatures, enhancing overall comfort for the tenant. Comfort and convenience are huge selling points for tenants who seek value for money.

In fact, tenants are more likely to stay longer in a property where they feel comfortable, reducing turnover rates, void periods and the associated costs for landlords.

Market Differentiation

In crowded rental markets, it can be challenging to differentiate your property from the competition. Energy efficiency serves as a compelling unique selling proposition, especially at a time where tenants actively seek it.

Energy performance certificates are a common inclusion on third party property portals and can be a decisive factor for prospective tenants comparing multiple properties. As a landlord, it is your responsibility to provide a copy of the EPC certificate when they first move into the property. Additionally, highlighting specific energy efficient features can attract a larger pool of potential tenants and, in turn, reduce void periods between tenants.

As part of our comprehensive list of property management services, we offer marketing on major portals including professional photography, description writing as well as accompanied viewings by one of our lettings agents. Find out more about what’s included in our landlord services, here.

Regulatory Compliance

Aside from competitive advantages, the private rental sector faces a number of regulations in regard to energy efficiency, most notably Minimum Energy Efficiency Standards (MEES). According to the MEES, all rental properties must have a minimum EPC rating of E before a new tenancy is agreed – but this also extends to those with existing tenants and is likely to change in line with new government policies.

It is vital for landlords to remain compliant to such regulations in order to avoid penalties and costly upgrades which can impact their returns. Penalties for failing to comply with energy efficiency regulations range from £500 to £30,000, so it’s in your best interest to make sure you’re informed.

Here are some tips for making sure your rental property is both compliant and competitive.

TIPS FOR LANDLORDS

• Conduct an energy audit

This needs to be done every 10 years as standard and is helpful keeping on top of your properties rental value. The first step to remaining competitive in the private rental sector is to evaluate the current EPC rating of your property portfolio and identify ways you can improve it for long term gain

• Advertise EPC ratings on listings and provide certificate

Whilst commonly included in property portal listings, marketing the energy efficient qualities of your property within the description can be extremely beneficial when trying to appeal to potential renters.

• Efficient appliances

As tenants actively look for lower monthly costs, switching to more energy efficient appliances is a powerful and cost-effective strategy for landlords looking to boost the attractiveness of their properties in a competitive rental market.

Some key considerations to improving the energy efficiency of your property are:

Energy efficient lighting – possibly the easiest and most cost-effective upgrade, fitting LED lightbulbs lasts longer and uses less energy.

Insulating the roof, walls and floors – with an estimated 35 – 40% of heat lost through walls alone, increasing overall insulation can lead to a drastic reduction if energy costs for tenants and also help protect your property from the effects of damp.

Draught-proofing doors and windows – sealing small gaps in doors and windows prevents heat from escaping and ultimately lowering heating bills.

Energy Efficiency Guide and Landlord Advice

Landlords who prioritise energy efficiency can not only attract and retain tenants more effectively, but also future proof your investments in the more environmentally friendly private rental sector. By embracing energy efficiency, property owners can ensure their rental properties stand out in a competitive market and help maximise the return on investment from your rental properties.

If you require advice on how to keep your properties energy efficient, download our guide or get in contact with one our team today.