New Green Deal Is A Great Deal For Private Landlords

25 April 2012  |  I-Am-The-Agent  |  0 Comments

UK buildings have long been inefficient – in 2009 they were responsible for 43% of the country’s total emissions with an estimated 4.1 million households expected to be in ‘fuel poverty’ this year. Homeowners and tenants the length and breadth of Britain are struggling to pay energy bills and with the rising cost of living and ever present threat of recession, landlords who can offer an attractive energy efficient deal when renting a private property are much in demand.

A new Green Deal scheme designed by the UK government will come into effect in October of this year. Intended to make the nation’s commercial and residential buildings more energy efficient, a recent survey by the National Landlords Association (NLA)  found that around half of landlords with one or multiple properties are already considering signing up for the scheme. The government says that the Green Deal is an excellent way to cut carbon emissions and meet fuel poverty targets. For tenants and landlords, it also provides an easy route to energy savings, creating warmer properties that are cheaper to heat and live in. 

How will the Green Deal work?

The Green Deal is an easy option for landlords who want to advertise a property safe in the knowledge that it is attractive to tenants. They will simply approach an accredited Green Deal supplier and ask for a Green Deal package to be installed in the property. An assessment will be carried out by an energy specialist and a series of appropriate measures recommended. The landlord chooses which improvements they would like to be made and can then leave the rest of the details to the Green Deal supplier. The supplier will arrange for the works to be carried out and will pay for the improvements to be made upfront.

When the works have been completed, the cost of making the energy saving improvements will be appended to the property energy utility bill, under a new heading entitled ‘Green Deal Charge’. The tenant responsible for paying the energy bill will then become responsible for paying the Green Deal Charge as well. This approach means that the occupier of the property pays for the works they are benefiting from.

To ensure that properties using the Green Deal scheme remain attractive to tenants, a Golden Rule of the Green Deal has also been created. This specifies that even when paying the energy bill with the Green Deal Charge included, the total cost of the bill must be less than if the Green Deal had not been taken out.

What are the benefits for landlords wanting to rent a property?  

The Green Deal is set to be incredibly beneficial to private landlords. There are numerous advantages to the scheme, not least of which is the fact that no costs are incurred by the landlord to make the property more energy efficient.

With energy improvements comes the prospect of a much more attractive property, making for an easier time of it when it comes to advertising a property for rent – energy efficiency equals lower energy bills and more affordable household running costs, something many tenants will be very enthusiastic about.

Providing warm, economical and modern housing also increases the likely tenant periods and can lead to longer relationships with clients, reducing the need to constantly find new tenants at the end of each lease and minimising dips in rental yields through properties lying vacant.

Any changes made to improve energy efficiency will likely also reduce other property maintenance costs by reducing the likelihood of mould, damp and condensation. This provides tangible cost savings in the long term.

Green Deal Charges are flexible. They are not tied to a particular utility company making it possible to switch for a better deal. The Green Deal Charge simply moves to the new energy provider for total flexibility.

Looking further ahead, implementing Green Deal measures now protects the landlord against the 2018 ruling that will prohibit the properties in energy efficiency bands F and G from being rented out.