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News from the Residential Property Investor, the bi-monthly magazine for RLA members Other articles from the May/June 2007 Issue |
Growing Green
May / June 2007
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Landlords need to be increasingly aware of environmental issues relating to property |
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Unless you have been on Planet Zog – and there and back will not have done your carbon footprint much good – you will know that we are staring at not so much a gentle change in the climate of thinking, as a whole green revolution in housing. Developers are responding quickly and radically, installing biomass boilers, solar panels, rainwater harvesting and extra insulation. And despite an extra cost of up to £20 per square foot, new developers like Kingerlee are springing up offering only innovative, energy-efficient dwellings. The building industry has also turned quickly to timber frame construction as a greener option. It now occupies around 23% market share, having hovered around the 10% mark for years. One developer, Linden Homes, uses the method on 65% of its sites. Meanwhile, thanks to an EU directive, all domestic properties being sold or rented out will shortly have to have an Energy Performance Certificate. These are part of the controversial Home Information Pack proposals due to become law on June 1, subject to a legal challenge from the Royal Institution of Chartered Surveyors. However, no matter what happens to HIPs, EPCs look like becoming a reality, even if they become stand-alone. The EU insists that they should be produced once every ten years. However, the Government wants to do better than this, by ensuring they are part of every home sale transaction. With rental properties, one suggestion has been that a new EPC is produced each time a |
property is let to new tenants, but the requirement now looks like every three years. EPCs on rental properties are likely to be made mandatory in October next year. The EPC will rate properties on an A to G basis like refrigerators, and be delivered by an accredited Domestic Energy Adviser for between £80 and £100 on smaller properties. The inspectors will look at the lagging of lofts, cavity wall insulation, double glazing, energyefficient light bulb fittings and whether boilers should be replaced. The Government hopes that by measuring the efficiency of properties, it will encourage owners to make improvements that will also save on the property’s carbon emissions. Currently, 27% of the country’s C02 emissions come from residential property. Now, you might well think this a load of old guff, and that this is just another example of the nanny state gone mad. Indeed, there are plenty of people arguing that EPCs are intrinsically energy inefficient in themselves as they will generate lots of inspectors driving around in cars and creating more paperwork. But the real problem comes in incentivising property owners, because of long payback times. With the limited tests that EPCs have had as part of the voluntary HIP trials that the Government has been running, the suggestion is that house sellers will not bother with energy upgrades, but that buyers might. Stick and carrot But what about landlords? After all, as they don’t even live in the properties they are being asked to improve, they won’t benefit from lower utility bills. |
It looks as though there might be a stick and carrot approach, hence the Government’s Green Landlord Scheme next year. The stick will be that it will be illegal to ignore the EPC obligation, with a probable fine of £200. The carrot is that tenants may take more notice of EPCs than home buyers. Given the choice between two similarly located properties, one with high utility bills and one with lower ones, it’s a no-brainer which they’d go for. So a good EPC could help attract tenants and avoid voids. But there could be many more carrots ahead. Mooted are allowances on capital gains tax, reductions on Council Tax and access to ‘green’ mortgages. These are all in the future. There is already some stick – in the form of the new Housing Health and Safety Rating System. And there is already some carrot, in the form of the Landlords’ Energy Saving Allowance (LESA), which provides private landlords who pay income tax with relief on capital expenditure of up to £1,500 for installing draught proofing and insulation of lofts, boilers and walls. Local authorities are catching on quickly to the issue of energy efficiency in private rental properties, which is why Hull City Council hosted a recent Landlords Day where landlords were given presentations from various energy bodies. An estimated 14,500 rental properties in Hull, which has a large student population and growing numbers of immigrants, include terrace houses built pre-1919 and between the wars, some without central or electric heating. Hull City Council is currently offering a 50% grant to landlords for the installation of central heating on the condition that properties meet the decent homes standard and provided that the landlords join an accreditation scheme. There are also discounted insulation grants available. Undoubtedly other local authorities will follow suit. Soon, energy inefficiency won’t be an option for landlords but, driven by market forces and public opinion, ‘green’ properties will be a necessity of their business. |
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Other articles from the May/June 2007 Issue
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