Thinking About Energy Efficiency When Renting Out a Property

Having an EPC is not only legally required when renting or selling a property in the UK, but it can help a landlord increase the appeal of their property and maximise the rent they receive. An up to date domestic EPC is essential for the landlord who wants to enter rent negotiations in the strongest position possible. Here are some of the ways a domestic EPC can help you increase your rental prices.

EPCs give landlords a stronger negotiation position

Prospective tenants no longer judge a rental property on looks alone. Many organisations that advise renters on how to get the best deal suggest they use the EPC date and the conditions of the energy efficient in the flat to negotiate improvements to the property before renting or a lower rent price. An EPC is legal for ten years; however, the older the EPC the more likely that energy efficient standards have slipped or need to be improved. An up to date EPC will give the landlord more options during the tenancy agreement as they will have documented evidence to counter a tenant’s claims to lower the rent.

EPCS maximise the landlord’s return

Negotiation of rental price will usually revolve around the standards of an aspect of energy efficiency on the property, like the attic insulation or windows. In these cases, tenants usually ask for a lower rent due to the higher expense on the energy bills or to have the issue corrected. One section of an EPC outlines the recommended energy improvements, how much they cost and if there are existing government grants for the improvements. This will give the landlord the ability to maximise their rent as they can see what more cost would be effective over a long period of time. They can judge if they would they lose more in reduced rent or by applying for a low interest loan to fix the issue?

EPC’s provide the landlord with protection

A common dispute between landlords and tenants revolve around who increased the properties energy efficiency through improvements. Having an up to date EPC will help the landlord prove they were the ones that provided the building extra value through increasing their energy efficiency as it is documented proof of the standard before a tenant moved in. This can save a landlord a lot of money, time and hassle. It also helps when justifying the deductions a landlord wants to take from a bond due to the client damaging or lowering the EPC value through their actions.

EPC’s give landlords a greater appeal

EPCs has become a hot topic for renters. Higher ratings can save them more money in energy reductions than a higher rating – and environmental protections and lowering CO₂ emissions is becoming an issue more people are concerned about and are aware of. By having an up to date EPC, you can demonstrate to you renters the money your property will save over your competitors in the same street.

The low-cost LED lighting, the insulated walls and triple glazed window that keeps you toasty and rich is so great sales platter for whoever is doing your viewings and will make your property stand out from the crowd. It can also help to appeal the environmentally aware and sooth any anxiety they have over your property in regard to energy efficiency. By having a greater appeal to renters, you will be able to choose your tenants with greater care.

Lower rent arrear in higher EPC rated properties

A report in Sustainable Homes called ‘Touching the Voids – the impact of efficiency on social landlord income and business plans’ showed a strong positive correlation between rented property with a high EPC rating and low rent arrears. Here are some of the interesting correlations between EPC and rent return that a landlord should take note of: –

  • The more energy efficient the home the shorter period they are void (unoccupied).
  • On average landlords pay less on refurbishing homes and staff cost on void properties which are more energy efficient.
  • Band F properties have the highest level of rent arrears and it decreases with each grade.
  • Other costs such as legal, staff and clean also decline by 35% in more energy efficient properties.

The previous categories have a lot of impact on these findings. As the landlord has greater control in the agreement, and a greater appeal housing houses are rented out faster, maximising their return. As they have a greater ranger of viable tenants they are able to pick the more reliable tenants with better references result in a reduced cost to refurbishment and rent arrears.

A current EPC will increase the rent the landlord can charge a tenant, but it will also lower their costs. If you want help maximising the value of your properties contact us and we’ll tell you how we can help.

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