The world finally seems to be taking seriously the threat posed by human-driven climate change. The evidence is all around us and the deniers look increasingly foolish. Reducing carbon emissions, eventually to zero, is not simply desirable but essential to the survival of the human race. But is renewable energy a realistic option for landlords and tenants?
Advances in renewable energy technology are happening rapidly but will only solve the problem if every building and every person embraces the solutions being developed.
Renewable energy is clean energy, however it is also highly cost-efficient; which is an important factor in its increasing adoption and acceptance.
With the world facing the kind of energy price crisis not seen since the 1970s, fossil and conventional fuels are stretching budgets of average individuals to breaking point. Clean, affordable, renewable energy is therefore the answer.
But what does this mean for the private rental sector?
Homeowners have some fairly straightforward choices, and they are largely free to make their own decisions. Things are more complicated for tenants of private landlords, who do not have the legal right simply to switch to renewables.
Neither is it straightforward for the landlords themselves, who have to weigh the cost of investment in renewables against its effect on revenue.
But there are options for landlords and their tenants.
Types of Domestic Renewable Energy
Some methods of generating power and heat are designed for domestic use, while others are scaled down versions of technology used at a national or regional level. Of the latter, the two most obvious examples are hydroelectric systems and wind energy.
These are generally associated with large tidal power installations and towering wind turbines, but if you are in the appropriate environment they can supply energy to individual homes.
If you live in an exposed area prone to high winds, then a 6kW pole-mounted turbine could save nearly £350 a year on bills and actually earn £235 in Smart Export Guarantee (SEG) payments from the national grid. If you live near a river or lake, then with just a one metre drop a domestic hydroelectric power plant could power your entire home.
However, much more likely options are those that don’t depend on environmental conditions such as the following:
It is very common to see homes with solar photovoltaic panels mounted on the roof. These generate power during daylight even without full sun, and store it in batteries for round the clock use.
Surplus power can be sold to the grid via SEG. The cost of this option is between £5,000 and £8,000, but it can cut your electricity bill by over £700 a year. Solar can also be used directly to provide heating and hot water.
Whilst not entirely carbon-free, this is a method of domestic heating which burns organic materials such as wood pellets, chips and logs, but emits no more carbon than was absorbed during the life of the tree from which the fuel is sourced.
Biomass boilers can cost anything from £4,000 to £25,000 depending on size and functionality, but can save nearly £900 a year.
Air Source Heat Pumps
These work on the same principle as refrigerators, but instead of removing heat they draw it in from the air outside. They function in all temperatures and can extract heat from the air and heat your home even in temperatures well below zero.
They are virtually silent to run, clean and efficient, potentially saving you £1,330 per year. Government grants of up to £5,000 are available towards the cost of installation, which can range from £3,000 to £18,000.
Ground Source Heat Pumps
Working on the same principle, but even more efficiently, ground source pumps extract low-temperature solar energy that is stored in the ground or in water. It compresses the energy to create higher temperatures and can supply all of a building’s heating and hot water all year round.
Because the ground temperature in the UK never gets as low as the air temperature, ground source heat pumps don’t have to work as hard as their air source equivalents.
A feasible option?
Since 2018, the Minimum Energy Efficiency Standards (MEES) have governed the obligations on landlords to ensure a certain level of energy efficiency. Its most significant effect is to make it unlawful to let properties with an energy efficiency rating below ‘E’.
The MEES also permits tenants to make energy efficient improvements to the property they are renting, regardless of any restrictions in the lease.
At Inventory Base we have always emphasised the value of cooperation in the private rental sector. Landlords and tenants are ideally placed to work together in the introduction of renewable energy sources. Tenants are well-qualified to advise and test because it is their home environment that is affected. Landlords stand to benefit in the long term.
Unfortunately the government’s Green Homes Grant scheme closed in March 2021, which was clearly a short-sighted move given how much work there is to do.
However, although landlords are in no way compelled to install renewable energy sources, the tide in housing construction is decisively in the direction of renewables.
Key dates to bare in mind:
From 2025, gas boilers are banned from newly built homes
From 2026, the UK will phase out all gas boilers
So there is a real need for landlords to understand the disadvantage they may face if in the next few years as a large proportion of the UK’s housing stock will either be carbon neutral new builds or properties will have been retrofitted for renewables.
Is there an upside to the imminent changes?
In a word, yes! By making these changes, consumers will enjoy lower energy bills and some of the major environmental concerns will have been addressed. This is likely to become a distinct selling points for rental properties.
Even now, tenants and potential new owners are querying the EPC levels of property, mostly because of the cost of fuel. However, this will inevitably help focus their options and take those landlords who introduce renewable energy options, reducing the need for high energy consumption and minimising heat wastage, to the top of the wanted list when it comes to choosing which rental property is the one for them.
Tenants want value and lower fuel bills so landlords who have not embraced this will find demand for their properties declining, and the ultimate resale value will similarly reflect this failure to adapt to the new green order.
We are facing a looming crisis in the cost of living. The implementation of renewable energy solutions won’t bring overnight relief, but the sooner the journey begins, the more quickly landlords and tenants will reach a happier destination.