The Landlords’ Guide to Going Green

The Landlords' Guide to Going Green

With the government’s new Green Deal announced, we look at the potential benefits for making your property more energy efficient.

Last month, the government unveiled the details of their Green Deal scheme.

The Green Deal is the government’s flagship scheme which hopes to encourage landlords to improve the energy efficiency of their properties. According to the Department of Energy and Climate change, the deal intends to “reduce carbon emissions cost effectively by revolutionising the energy efficiency of British properties.”

This is not the first eco drive landlords have seen. In 2008, Energy Performance Certificates (EPC) were introduced, although they have yet to have a significant impact on the market. Other schemes were discussed but most were unpopular with landlords, who were put off by the fact that while it was their responsibility to pay for the improvements, it was only ever their tenants who benefited from them – what became known as Split Incentives.

This is where the Green Deal promises to be different. It has been designed precisely to take all the burden of going green away from landlords.

At its simplest, the Green Deal allows landlords to make energy efficiency improvements to their home with zero costs to themselves. Instead, the capital outlay used for the improvements will be provided by a Green Deal Supplier. This means that property owners should be able to get around £10,000 worth of energy efficiency measures installed in their property without having to pay a penny. The repayments for the works will then be attached as a loan to the utility meter of the property and paid back over 25 years. So, whoever pays the bills in the property – usually the tenant – will be the one paying back the loan. And because it’s attached to the meter, rather than the individual, it will only be paid off by people living in the property and benefiting from the improvements.

The deal promises to help tenants too. As the ‘Golden Rule’ within the deal stipulates that the cost of the new energy bills plus the green loan repayments must be lower than had the improvements not been made. That means lower utility bills and a warmer house to live in.

Improvements covered by the Green Deal will include:

• Insulation – loft, floor, wall cavity and solid wall
• Draught-proofing
• Lagging for water pipes

There are also some improvements that may be a part of the scheme, but a decision has yet to be made. These include:

• Double glazing
• New boilers
• Solar panels

Currently in its consultation phase, the Green Deal should be rolled out across the UK as of October next year. And according to a recent survey, two thirds of landlords are thinking about taking advantage of the initiative.

Even if they are unconvinced by the deal, there are many reasons why landlords might want to consider making their properties more energy efficient.

Here are the top benefits for going green:

Beyond the large investments, there are simple things you can do as a landlord to help make your property more energy efficient. Such as installing energy efficient light bulbs and appliances, and encouraging your tenants to use less electricity by turning off appliances and lights when not used.

If you do decide to take advantage of the Green Deal, or if you pay for any energy efficiency improvements yourself, make sure that you update your Landlords Insurance, as changes to your property could affect your policy.

Potential cost savings