Thought leadership, Susie Aliker, September 2022
65% of rental properties risk breaching new energy efficiency rules currently proposed by Government to take effect from 2025 – and missing out on big energy savings.
After one of the hottest, driest summers on record, we can all see the impact climate change is having on the environment around us. Add to this the growing energy cost crisis, and the need to change our approach to how we use energy has never been clearer. For landlords, this need is even more pressing.
Even though energy costs are front and centre of the news, awareness about the connection between climate change and how we heat our homes remains worryingly low – even among landlords.
This lack of awareness is even more surprising given that since April 2020, barring a few exceptions, regulations now require all private rented properties to have a minimum E rating on their Energy Performance Certificate (EPC).
And these rules are set to get stricter.
By the end of 2025, all new rental properties are expected to be required to have an EPC rating of C or above. And by the end of 2028, all existing rental properties are also expected to need to have a rating of C or above before they can continue to be rented to tenants.
Yet understanding of the regulatory changes is still surprisingly low. While many private landlords are aware of the new energy efficiency requirements expected to come in, one in five say they don’t understand the details, and one in six are completely unaware. 
Supporting your tenants, and the planet
The annual energy cost of the average home with a band C EPC rating is around £750 less than the average for a band E rated home . That’s a massive cost saving for tenants, who may be struggling with rising energy costs, at the same time as doing the right thing to reduce our carbon emissions.
Increasing the energy efficiency of Britain’s homes is an enormous task – we have some of the oldest and worst insulated homes in Europe, with only 15% of housing being built since 1990. This translates to well over 50% of properties in the private rented sector currently having an EPC rating below C .
Although there are big energy cost savings to be gained by improving the energy efficiency of properties, there could also be big costs involved in upgrading properties.
So, what can you do?
1. Start taking action now
The new energy efficiency rules are expected to come into force in 2025 and will continue to tighten. With the scale of home improvements needed across the country, it’s sensible to start looking at what changes might be needed for your property now.
2. Look for impartial expert information and guidance
Take advantage of the valuable information available from various sources. Our brand new Tandem marketplace which is due to launch shortly will be a great source of information partner providers, along with other leading sources of independent information such as The Energy Saving Trust and Home Energy Scotland.
3. Arrange an energy assessment
If you don’t know your property’s current EPC rating or want to get an updated rating, you’ll need to use an approved domestic energy assessor. If you’re in Scotland, there’s a different process to find an approved assessor. (Remember, landlords and letting agents are required to give tenants at least 24 hours written notice before any property visits, so work with your tenants to arrange a suitable time for someone to assess the property).
4. Research different energy efficiency options
There are two critical areas where landlords can improve energy efficiency in residential properties:
Installing or improving insulation and draught-proofing will reduce heat loss and is critical to improving the energy performance of any property
Small steps like insulating hot water tanks, can save energy and money.
Bigger jobs like installing cavity wall insulation or double-glazed windows can cost more, but will have a bigger impact on energy bills and EPC ratings.
According to Government data, the typical cost of installing insulation and draught-proofing on a mid-terrace house is around £620, but could save you around £180 on your energy bills per year, meaning you could recover the cost in just over 3 years and generate significant long term savings . But with the latest energy costs, this payback could be realised sooner as we move away from expensive traditional energy prices.
Investing in an efficient heating system is by far one of the most important steps you can take to improve your property’s rating
Whether it’s installing new heating controls, like room thermostats, or replacing an old boiler, there are lots of options for upgrading existing systems.
The typical cost of a new boiler is around £2,000-£3,000, with the potential to save tenants around £300 per year and making a big difference on a property’s overall rating.
But landlords should also be considering other energy efficient heating systems:
- Solar can be a great way to improve energy efficiency, with systems able to provide around 90% of a property’s hot water requirements in the summer. The average installation cost is around £3,000-£5,000, with savings between £100-£120 a year in energy costs for a typical 4m2 system.
- Heat pumps are new home heating technologies that effectively capture heat from the outside and move it into a home. There are different types of heat pumps, which work in different scenarios – but they can have a dramatic impact on energy efficiency in the home. An air source heat pump can cost between £7,000-£13,000 to install but can produce energy bill savings of over £1,000 a year and will significantly improve the EPC rating of a building.
As the UK’s greener bank, Tandem is focussed on supporting our customers in making greener choices.
That’s why we are launching the Tandem marketplace, a one stop shop with information on home decarbonisation, practical advice on how best to move forward, and access to partners providing home energy improvement products and a range of financial solutions to enable greener choices.
Financing Green Home Improvements
Especially considering the current cost of living rises, covering the cost of green home improvements could be a concern for many landlords. Tandem however has a range of options that can help you with financing:
If you’re a private landlord, looking to raise funds on a consumer buy-to- let basis, you may be able to take out a secured loan from Oplo, part of the Tandem Group, against your property to cover the cost of green home improvements.
Tandem also offers financing through our home improvement partners, dependent on your location and eligibility.