How increasing energy efficiency can help reduce disputes
With more than a quarter of renting households in the UK now living in fuel poverty, combined with the UK having some of the oldest and worst insulated housing stock in the world, tenancy disputes arising as a direct result of energy efficiency issues could increase.
NRLA deposit protection provider, mydeposits, has put together this helpful guide to explain the benefits of energy efficient properties for landlords and how they can minimise the chance of a disputes with their tenants. The guide will cover:
- The current situation with landlord EPCs
- How improving energy efficiency in a rental property can reduce disputes
- What measures a landlord can take to improve energy efficiency
- What tenants can do to reduce energy use and deposit disputes
Where do landlords stand now with EPC ratings?
Following the Government's surprise EPC reversal in September 2023, landlords are no longer legally required to improve their rental property energy ratings. For most private rented sector landlords, this means that E remains the minimum EPC rating level, rather than the proposed C rating that was due to be made law in 2028.
Many landlords are frustrated by the change - not least those that chose to begin or had already made the necessary energy efficiency upgrades – and it is a decision that brings more uncertainty into a property market that would benefit from greater stability.
However, with the prospect of a potential change of government during the next year, it’s impossible to know if a minimum EPC rating of C will be reinstated as part of the UK’s roadmap to reaching its ambitious goal of net zero by 2050; though as domestic home heating accounts for 14% of the UK’s carbon emissions it’s certainly a possibility. As well as signalling its commitment to a legally binding Decent Homes Standard for the private rented sector, Labour has said it will upgrade every home to EPC standard C ‘within a decade’.
Irrespective of any arbitrary government figure, improving the energy efficiency of a tenanted property would seem to be in any landlord’s best interests as a way of protecting both their investment and their tenant’s wellbeing. This explains why, despite fewer landlords now planning on making energy efficiency improvements since the Government’s U-turn, 20% of landlords still intend pressing on to improve their property’s EPC ratings in the very near future.
What is an EPC?
An EPC (Energy Performance Certificate) is a legally required document that certifies the energy efficiency of a property, with a rating, following an assessment. The rating is provided on a scale from A (most efficient) to G (least efficient) and suggests recommendations for improving energy efficiency. Its aim is to help tenants and potential buyers make informed decisions about energy consumption and costs associated with a property. Landlords and sellers are legally required to have a valid EPC (carried out by an accredited domestic energy assessor) before marketing a property to rent, renew a lease or sell and property. The penalty for not having a certificate can result in a fine. An EPC lasts for 10 years and an EPC of C or above is an increasingly useful property marketing tool.
How can improving energy efficiency in a rental property reduce disputes?
Improving the energy efficiency of a property can help to minimise the chance of end of tenancy disputes in a number of ways.
Consumer prices are still increasing due to the ongoing cost of living crisis, and this is having an impact on all UK residents, including landlords. But those that live in rented accommodation are the most vulnerable and more deeply affected by price rises. Tenants with reduced spending power are at a greater risk of experiencing financial issues, and as a result falling behind with their rent. More money in tenants’ pockets means less chance of them falling into arrears.
By helping your tenant spend less on energy consumption, you can reduce the chance of them falling behind with the rent, and in turn also reduce the likelihood of disputes during or at the end of the tenancy where they have had to cut corners and not looked after the property as well as they should.
Despite price reductions over the last year, energy prices remain high. The price of gas in October 2023 was around 60% higher than two years earlier, while the price of electricity was 40% higher.
With prices set to increase in January and fewer energy rebate schemes in place, many tenants will restrict what parts of the property they heat in an effort to save money. This, combined with closing windows to conserve warmth, reduces ventilation, creating the perfect environment for damp, mould and condensation.
Tenants are more likely to use energy efficient heating, so as well as bringing their bills down, landlords who can improve the energy efficiency of their property are more likely to avoid time-consuming end of tenancy negotiations, expensive remedial work and a potential dispute. Estimates show that tenants could save up to £570 per year on average if all properties available were more energy efficient (EPC band C).
NRLA insurance partner, Total Landlord, has created a damp and mould tenant’s checklist for landlords to share with tenants to help tenants avoid damp and mould and reduce the likelihood of disputes relating to these issues.
What measures can landlords take to improve energy efficiency?
A landlord should look at the property’s previous EPC, if there is one, to see what improvements and upgrades were recommended. Alternatively contact your Local Authority to ask if they have any property advisors, or source a specialist consultant.
- Bleed any radiators at the same time the boiler is serviced
- Fit double (or triple) glazing if the property doesn’t already have it and it is allowed (for example, some conservation areas and some leasehold properties may have restrictions)
- Reduce heat loss. Installing (or replacing) roof insulation and installing draught-proofing/excluders on doors and windows throughout the property can help reduce heat loss. Older properties might benefit from wall or floor insulation as a major upgrade
Tip: Radiator reflector panels are a low-cost, easy-to-install solution to reduce energy consumption, especially for any uninsulated external walls. - Upgrade appliances. If you let the property with white goods or any other appliances, consider their energy efficiency when replacing them
- Put in energy efficient lightbulbs. Also advise the tenant to buy these when they need replacing
- Consider supplying a dehumidifier, especially if there is no outdoor or well-ventilated drying space
- Upgrading the heating system. Old boilers tend to lose a lot of heat and are less efficient. Modern condensing boilers are more efficient though it’s worth reading up about heat pumps to find out if this is a more appropriate solution for your property. Lag any uninsulated pipes and water tanks and hot water cylinders if there are any
Energy efficient schemes and grants
There are several programmes – such as ECO4 and the complementary Great British Insulation Scheme – for which landlords/properties may be eligible. Generally speaking they encourage the adoption of energy efficient measures, which help reduce energy bills and carbon emissions. We generally recommend that landlords should speak to their local authorities to see if they qualify for any available schemes.
How can tenants help?
Tenants can play a key role in reducing energy wastage and lowering their bills. As always this starts with establishing good two-way communication and asking them to report any issues to you as soon as possible. Combined with the measures you take as a landlord, the tenant should do as many of the following as possible:
- Move furniture away from radiators to let the heat radiate into the room
- Turn down radiators in rooms not being used. Explain that turning them off completely makes the boiler work harder to heat those rooms when they are being used, so is counterproductive
- Wash clothes at a lower temperature or on eco settings to save 33% energy
- Turn appliances off at the socket to save up to £50 per year
- Use the tumble dryer less and if used, run a full (3/4 of the drum) load
- Dehumidifiers are a good way of inexpensively drying clothes on racks
- Don’t dry clothes on radiators as they can’t dry clothes and heat the room at the same time. This method also encourages damp and mould, especially if the room is poorly ventilated
- Thicker curtains can help less heat escape through windows
The tenant’s responsibilities
First and foremost, the tenant is responsible for keeping the property well maintained throughout the tenancy. This includes keeping it heated appropriately and this should be included in the tenancy agreement. The landlord should remind the tenant about their responsibilities and what is expected of them during the tenancy.
Tenants can cause an issue by either their action or inaction which may lead to a dispute. For instance, not turning the heating on during winter can cause damp and mould, so the advice is that the heating is always kept on in the colder months, with the thermostat set to a minimum of 13 degrees C to avoid the possibility of these issues.
It's worth reminding tenants of their responsibilities when they may be leaving the property empty as was the case in this mydeposits case study involving frozen pipes. In this case, the tenant was away for longer than expected, leaving the heating switched off and not shutting off the water stop cock as they had been advised to do by the agent. Due to extremely cold weather, a pipe froze and then burst, flooding the property, and causing extensive damage. In this case, the damage that was caused was found to be due to the tenant’s omissions and the landlord was awarded the full amount claimed.
As well as making sure the tenancy agreement clauses are clear on heating the property adequately and what to do if the property is going to be left empty, particularly in the winter, landlords should make sure their landlord insurance is up to date, as the damage can be costly and tenants’ deposits may not cover all the damage.
A tenant wishing to carry out energy efficiency saving improvements should always ask for the landlord’s permission in writing. If the request is reasonable and potentially an improvement, the landlord should consider the request and not refuse any alterations that are going to have a positive impact on the energy efficiency of the property. Everything agreed should be documented in writing.
“In our experience, landlords who keep their rental properties updated, in good condition and energy efficient, are offering a great incentive to their tenants to look after the property well and potentially increase the chances of having a successful long-term tenancy. Just as importantly, it encourages a good base for a positive relationship throughout the tenancy to make sure that anything that happens during the tenancy is reported promptly.”
Suzy Hershman, Resolution Department Lead at mydeposits
Energy efficiency properties benefit everyone
The more energy efficient you can make your property, the better it is for the environment and the more desirable it will be to tenants that want both lower energy bills and a lower carbon footprint.
During a cost-of-living crisis, a tenant who sees that they can afford to heat and ventilate your rental property is:
- reducing the possibility of damp and mould that can be costly to remedy, and
- is less likely to default on rent payments
These are two causes of end of tenancy disputes that are on the rise
Although there will be an initial cost to you for improving the energy efficiency of your property, you should benefit financially in just a few years.
As well as maintaining good communications with your tenant, carrying out mid-term inspections and any necessary work at the right time is especially important during winter, and is an additional way to avoid small issues escalating into end of tenancy disputes. For related content read mydeposits NRLA guide, ‘Three common winter tenancy disputes and how to prevent them’ and Total Landlord’s ‘Ultimate guide to having an eco-friendly property’.
NRLA members get a 30% discount on the deposit protection fee when they protect a deposit with the mydeposits insurance-based scheme in England and Wales.
