The Scouts motto of ‘be prepared’ is particularly apt at this time for private sector landlords, faced with changes in legislation it appears on a daily basis. It has to be said that there have been warnings and help available for a long time, which sadly, some landlords have chosen to ignore. One has been the move to improve the energy efficiency of the worst properties in the country.

For several years, landlords have been advised to apply for Green Deal loans to improve energy efficiency to their properties. The loans are re-paid by the tenant from the savings they make from the lower bills they would have in a more energy efficient homes. 330,000 buy to let landlords, for whatever reason, have failed to take advantage of these schemes. Their properties tend to be older, from the 19^th century and the first quarter of the 20^th. Whilst these properties may not be as comfortable as others, and undoubtedly more expensive to heat, their owners seem to have been blissfully unaware that this is a serious issue. 

This will all change, however, from April 2018. From that date, landlords must ensure their properties have an energy efficiency rating to at least a band E. We know that if 330,000 landlords are aware their properties are rated at less than an E, there will be far in excess of 330,000 homes in bands F and G, indicating that major works are needed to bring them up to the required standard. And how will this be funded? The new Department for Business, Energy and Industrial Strategy is proposing that landlords should pay for these improvements up front, themselves.

This could be an expensive undertaking. Full central heating would cost close on £4,000.  New energy efficient boilers, where central heating is already installed, would cost in the region of £2,000. Combine it with cavity wall or external insulation, with loft insulation, and the total costs could around £5,000. The Government dispute this, believing costs will be minimal with few homes hit. How they arrived at these conclusions, with the numbers of properties with very low ratings that there are, they do not say, but re-assure landlords that as 60% of private sector homes are owned outright, they will have considerable equity in their properties and should therefore be able to raise funding from re-mortgages or loans. 

As it is already acknowledged that the worst energy efficiency is found in the oldest properties, they will almost certainly have other maintenance problems – in new roofs being needed, drain problems etc. which are also considerable expenses. Some of the landlords of these properties will be dependent on them for their income and may not feel they can afford to take out loans. 

So who will pay? The tenants, in higher rents. The private sector, as landlords dispose of properties and as investors withdraw from buying to let. The private landlord is desperately needed, he will meet the shortfall in accommodation that, with the biggest plans in the world, the Government/social landlords cannot provide. Don’t be forced out, do whatever work you can to make your properties ready for April 2018. Be prepared!

For advice on buy to let issues – General Knowledge