Eco follow-up: Information for Landlords

Unless you’ve been living under a stone for the last month, you’ll know green issues are the number one topic of conversation. While world leaders have debated coal mining and deforestation, there are a number of take-aways from recent weeks for landlords and tenants.

Boilers: in the biggest shake up of how we heat domestic homes in living memory, the Government’s Heat & Building Strategy sets out the end of gas boiler installation. Property investors who develop their own portfolio will be the first to be affected, as the fitting of conventional gas boilers in new properties is to be prohibited from 2025.

All landlords need to take note of the second deadline. From 2035, the sale of conventional gas boilers will be banned, meaning that if a gas boiler breaks or is condemned in a buy-to-let property from 2035, it cannot be replaced with another gas boiler. Existing gas boilers that work, however, won’t have to be removed.

There is financial assistance available to landlords who would like to make a move away from gas fired central heating sooner than the 2035 deadline. The Clean Heat Grant is launching in April 2022 and landlords can apply for up to £5,000 of financial help to install a heat pump system – the Government’s preferred method of heating rental properties moving forwards.

The £450 million fund will cover around 90,000 heat pump installations (which currently cost an average of £10,000) but it will be offered on a ‘first come, first served’ basis. We advise those hoping to take advantage of the grant to apply as soon as the initiative is open for applications.

Funding: a fund worth £4.3 million is going to be shared by local councils in a bid to raise energy standards in the private rental sector.  Some 100,000 extra engagements with landlords will encourage them to comply with current eco regulations and make energy saving improvements – not only to save the environment but also to lower the fuel bills of tenants amid growing fears of fuel poverty. Part of the initiative is to offer landlords free property surveys that will identify where alterations can be made.

Green mortgages: eco-based lending is gaining traction and landlords with the highest EPC ratings now have access to the most favourable interest rate repayments and priority products. It is already reported that the number of ‘green’ buy-to-let mortgages has quadrupled in the past six months, with landlords encouraged to trade energy-saving improvements for advantageous lending conditions.

MEES may get stricter: MEES (Minimum Energy Efficiency Standards) for private rented properties may get tougher in the near future. Landlords need to watch the deadline of 2028, when the Government has proposed that all new, renewing and extending tenancies will need to have an EPC rating of C as a minimum. There’s also an ambitious plan for the eco bar to be raised even further, with the Government’s energy white paper aiming to outlaw new, renewing and extending tenancies that fall below a B from 2030.

If you would like to discuss energy efficiency in a rental property, please don’t hesitate to get in touch.

Extinguishing the gas boiler flame: home heating latest

While most of the country was glued to October’s Budget, hoping for news of a cheaper pint or a public sector pay rise (yes to both), there was very little in Rishi Sunak’s address that directly affected property buyers and sellers.

Although there were notes for the housebuilding sector and welcomed funds for those caught up in the cladding scandal, it was actually an announcement the previous week that will have the biggest impact on everyday property owners and future home movers.

Prime Minister Boris Johnson unveiled more details of his Net Zero green agenda in October, with a focus on the future of domestic heating. Responding to the statistic that residential property is currently responsible for 16% of the UK’s total carbon emissions, gas boilers will eventually be replaced with greener ways of heating our homes.

The news is important for purchasers and sellers of property as the age of a boiler installed in a property and the fuel it runs on will become a big part of the decision-making process in the future – and it may even affect a buyer’s ability to get a mortgage. So, what are the top take-aways from the Prime Minister’s latest eco address?

The good news is there are no imminent changes and it’s fine to keep heating your home with a gas boiler. The key dates are 2025 and 2035, depending on who you are. The first adjustment applies to house builders and developers, who will be banned from fitting conventional gas boilers in new properties they construct from 2025.

The second change won’t happen until 2035, when the sale of gas boilers will be prohibited. What does this actually mean? If your current gas boiler is condemned, is beyond repair or needs upgrading due to inefficiency, you won’t be able to replace it with another gas boiler after 2035.

There is no suggestion that perfectly fine, working gas boilers fitted to UK homes will need ripping out in 2035. If it’s annually serviced and safe, homeowners can continue with their current gas boiler until it irretrievably breaks down or is deemed unsafe to use.

Many homeowners are beginning to question what the alternatives to gas boilers are. The Government is hoping we’ll all convert to heat pumps – either water, ground or air types. And the cost? Currently the average supply and installation of an air heat pump will set you back approximately £10,000.

Encouragement to make the switch to heat pumps sooner rather than later is coming in the form of a boiler upgrade scheme. Some £450 million is being made available, with households able to apply for a grant worth up to £5,000 to help fund a new heating system. The scheme, to be called the Clean Heat Grant, will launch in April 2022, and the current plan is for energy regulator Ofgem to become the scheme’s administrator.

Experts have, however, sounded a note of caution. Calculations show the £450 million fund will only cover around 90,000 heat pump installations and those interested will be processed on a ‘first come, first served’ basis.

So are there alternatives to heat pumps? There is nothing stopping homeowners looking after their current gas boiler until it reaches the natural end of its lifecycle, which could take them beyond the 2035 deadline. An ambitious and not totally reliable alternative would be to bank on hydrogen technology being made widely available in the future. It is hoped ‘dual fuel’ boilers that start by running on gas but can switch to hydrogen power will advance to such a state that they can be installed in domestic settings, but the jury is out on whether this will be possible.

There is also the option to go all-electric with storage heaters, electric radiators and hard-wired underfloor heating, with additional options including wood-burning stoves, solar panels and oil-powered central heating. The future of oil-fired boilers is unclear at this stage, although we do know they will also be banned from new builds from 2025.

A word of warning when considering future sources of domestic heating. Boris Johnson has also underlined his intention to make it harder to mortgage homes with the worst energy ratings in the future.

Banks and building societies will be encouraged to offer the best mortgage deals to the properties with the highest EPC ratings, and the danger is that properties with poor eco standards will face higher-than-average arrangement fees and interest charges – or they may even become unmortgage-able.

The Government is also considering introducing a date for all homes to meet minimum energy standards, ahead of its 2050 net zero target. What exactly does that mean? The Prime Minister wants all owner-occupier homes to be of a certain ‘green’ standard, achieved through eco-improvements and energy assessments. Heating your home in the most energy efficient way will help homeowners reach any new targets and it’s quite possible, but not confirmed, that homes with a poor EPC may become more challenging to sell in the future, forcing the owner to make eco alterations.

If you would like to chat about your current central heating or EPC rating, get in touch today.