Feature: Energy performance – the most cost-effective improvements

By Paul Brett, managing director, intermediaries at Landbay

Record temperatures during the summer heatwave reminded us all that housing in future will have to work efficiently in more extreme weather conditions.

There will be a further reminder in the autumn – and this time the effects will be felt in the pocket.  Utility bills are rising steeply for the second time in around six months, following a sharp increase in energy costs in the spring.

If landlords have not yet undertaken work to improve the environmental performance of their properties, there is still time to act – but they need to move quickly to ward off some of the worst effects of higher costs.  The government has already raised the standards for the environmental performance of rented accommodation, and is set to impose even more demanding requirements in the coming years.

Rising standards

Since 2018, landlords have had to ensure that rental properties have a minimum Energy Performance Certificate rating of E.  But the government has proposed raising this standard to a C rating for new properties in 2025 and for existing ones in 2028.

Thar timetable implicitly recognises that it is easier to build new properties to high environmental standards but more difficult to retro-fit existing ones to make them more energy efficient.  So, what are the best options for improving the environmental performance of the existing housing stock?

Landlords can get some guidance on improving the energy efficiency of existing properties from the website of the Department for Business, Energy and Industrial Strategy (BEIS).  It sets out to give advice on the costs and benefits of different types of modifications landlords can make to their properties.

It is important for property owners to bear in mind that the construction methods and environmental standards of existing homes will vary significantly.  Even allowing for this, however, the BEIS website suggest that some types of property improvement are likely to be much more cost-effective than others.

Financial returns

The website indicates that the best financial returns for landlords may come from installing room-in-roof insulation.  BEIS suggests that the indicative costs of this are between £1,500 and £2,700 but would deliver typical savings of £837 a year, a significant sum that would re-pay the outlay within two to three years.

An even more cost-effective improvement is to improve insulation of the hot water tank, although this does yield a smaller cash saving overall.  BEIS suggests that this job could be completed for an indicative cost of just £15-30, yet would cut bills by £142 annually, a saving in a single year of at least four times the cost of doing the work.

Installing low energy lighting has an indicative cost of £20 but saves £21 a year, BEIS says. Other improvements are much more expensive, though, and yield proportionately only relatively small savings. Introducing internal or external wall insulation, for example, could cost £4,000 to £14,000 yet saves a relatively modest £195 a year.

The website recommends that improvements are carried out in a specific order to achieve the best results – but it is well worth landlords carrying out their own research.  With energy bills rising sharply and the government demanding higher environmental standards, there are some very cost-effective ways of delivering significant improvements.