Today the UK Green Building Council and WWF have published a report they jointly commissioned from us here at Parity Projects, investigating the costs and benefits of the forthcoming minimum standards for privately rented homes. Amidst concerns from some that the regulations would place an undue burden on landlords, the analysis shows that in fact the average cost of bringing F- & G-rated properties up to the expected minimum standard (an EPC rating of E) is a modest £1,421. But the low cost is just part of the story. Private rented homes account for significant proportion of the UK’s fuel poor households, and the report demonstrates that, on average, the improvements required will save occupants more than £400 per year on their energy bills. That’s a “pay-back” of less than four years.
While those savings would usually be made by the tenant, there are significant benefits for landlords too. DECC’s own research suggests that E- and F-rated dwellings sell for approximately 6% more than their poorer-performing (G-rated) counterparts. For the average UK house, this means an uplift of £15,000 – a ten-fold return on the average initial investment. Of course landlords of the poorest households are also likely to see a reduced risk of rent arrears as costly fuel bills diminish following these improvements.
With such short pay-backs on the measures identified, it is possible that many of these will meet the “golden rule” and qualify for Green Deal finance, meaning that there could actually be zero up-front costs to the property owner. In many cases, it will also be possible to subsidise the works with an ECO grant or Green Deal cash-back, or to offset the costs against tax through the Landlords Energy Saving Allowance scheme.
Given the potential for these regulations to play a role in re-invigorating the retrofit market after the last year’s trials and tribulations, creating jobs and growth along the way, it seems they could represent a pretty good deal for everyone concerned: tenants, landlords, the Government and UK-plc. We look forward seeing the long-awaited consultation on the detail of the policy, and to doing more of what we do best – helping landlords to understand how to meet the requirements as cost-effectively as possible.
If you’re a private landlord and would like help identifying the most cost-effective way of bringing properties in your portfolio up to the 2018 standard, please contact us, or vist our “Services for Private Landlords” page.
The full UK-GBC/WWF report is available here: Minimum EPC standards report WWF&UK-GBC v1pt4