Over the course of the next 13 years, 6 million homes will be insulated to help save families up to £650 per year on their heating costs. As a landlord, you will need to consider the steps you’ve already taken or the steps you can take to insulate your properties.
This move is part of the UK government’s plans to reduce emissions of greenhouse gasses.
The government has long characterised those homes spending more than 10% of their income on fuel as ‘fuel poor’ and as living in ‘fuel poverty’. All these properties will now be redeveloped to meet the new energy efficiency standards over the course of the next 13 years.
There are currently millions of people living in fuel poverty and many millions of those are living in the private rental sector. This means landlords will have to make the necessary investments in their properties in order to help reduce their tenant's energy bills.
In order to encourage the insulation of greener living, it’s likely that bank will be ‘nudged’ to offer ‘green mortgages’ which offer lower interest rates to people buying energy-efficient homes in the hope that this will see property owners updated their properties before selling them.
There is some talk that there will be changes to the stamp duty rates in order to help people buy more energy efficient home, however, the government is unlikely to want to change the stamp duty rates following the confusion caused by the last round of changes.
The government's new Clean Growth Strategy, details how the government plans to meet the climate change targets. Prime Minister Theresa May said: “Clean growth is not an option, but a duty we owe to the next generation.”
As part of the strategy document, there are proposals to increase the number of offshore wind farms by a factor of four, create a ‘network of forests’ over around 130,000 hectares to offset emissions and store carbon in trees and incentives to encourage farmers to turn less productive farmland into wooded areas.
Included in the strategy is a £84m fund to advance developments in heating, alternative fuels and low carbon tech solutions, including carbon capture technologies to help store carbon where they are created.
There is also mention of shipping carbon dioxide to Norway, who are currently in the process of developing carbon capture technologies.
This cautious support is likely due to the UK’s past records on the development of carbon capture technology, which has already seen two government schemes focused on North Sea Gas and power stations being cancelled.
The aspiration of the government regarding residential homes is to see as many of them reach energy rating C by 2035. They will facilitate this by extending the Energy Company Obligation to 2028.
Unfortunately, only 29% of new homes have an energy rating of C or better, and the private rental sector, which has older properties will likely be hit harder under this obligation. It’s estimated that upgrading a home from an energy E to a C rating would save the occupants around £650 a year in energy costs.
This change in government policy comes after years of lobbying from green groups and the construction industry to have insulation included in the government’s infrastructure plans. Whilst this doesn’t go as far as many would have hoped it is a step change in policy.
In addition, any property rated as F or G needs to be upgraded by next April and for existing tenancies, the improvements need to be made by 2020. At those levels, there are even greater saving for tenants to be made. The government state that there should be no costs to landlords at this point because there are a number of government loans and subsidies which are available. However, it should be noted that there will likely be an upfront cost if you’ve got to improve your property.
It’s also worth remembering that you won’t be allowed to continue with a tenancy beyond 2020 if your property is below an E rating. Remedial action is required in the next couple of years to be ready for the change.
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