Recent research by mortgage lender Together revealed 79% of owners of properties built before 1900 accept they need to make changes to improve the property’s energy efficiency, but 57% don’t know where to even begin.
Additionally, an astonishing fifth of period property owners are even completely unaware of the need to adapt their properties. There are a number of reasons why you may need to improve the Energy Performance Certificate (EPC) rating of your existing and future properties.
In this blog post, we’ll cover why you need to be thinking about improving the EPC ratings of your HMO properties, how to get started on making energy-efficient improvements, and some of the most common ways to do this for older properties.
Why You Need to Consider Improving EPC Ratings
For starters, the government has announced proposals to increase the minimum energy efficiency standards for privately rented properties. Since April 2020, it’s been mandatory for all rental properties to have a minimum EPC rating of grade E.
The new proposals are set to require privately rented properties to have an EPC rating of C or above for new tenancies from 2025 and all tenancies by 2028. Research by Shawbrook Bank revealed as many as 15% of UK landlords are unaware of these potential changes surrounding EPCs.
While this hasn’t been written into law yet, it is something the government has talked about doing for some time, and the Minimum Energy Performance of Buildings (No. 2) Bill is currently in its second reading within the House of Commons.
Because of this, it’ll likely be worthwhile to start investing in energy efficiency improvements for your existing HMO properties now, particularly if your property’s EPC is currently below grade C. And if you’re considering buying HMOs with lower ratings moving forward, you need to consider the costs of improving their EPC ratings when analysing deals.
Additionally, with energy prices soaring and suppliers going bust, energy-efficient improvements can help you and your tenants make savings on energy bills. Further energy price cap rises are expected in April and October as well, which will further increase energy costs.
On top of that, many people, particularly young people, are looking at ways they can live more sustainable ways. A HMO property with more green features or a better EPC rating is likely to be more appealing to those who are energy conscious, which could in turn create greater demand for your property and rooms.
How to Get Started Making Energy Efficient Improvements
As there are many reasons why HMO landlords should get started making energy efficiency improvements to their properties, you need to know how to improve the EPC rating of the properties you currently have or future properties you purchase.
If you aren’t sure where to even begin, don’t fret. Here are a few simple tips to help you get started in understanding how you can make energy-efficient improvements to your HMO portfolio.
1. Look at the EPC
To get started, take a look at the Energy Performance Certificate of your property. This certificate states what the property’s EPC rating is, which is scored from A to G depending on the building’s energy efficiency. An EPC is provided during the purchase of a property, and landlords need to get a new EPC every 10 years.
The certificate also helpfully includes recommendations for improving the property’s energy efficiency, estimates of how much it will cost to install the upgrades, and the potential rating if the improvements were made. This can provide a great idea of what needs to be done to your property to increase its EPC rating.
Note: If you can’t find your copy of the property’s EPC, you can usually access this online. If your property is located in England or Wales, search by postcode on the government’s website.
2. Assess Your Property
There are a number of ways you can improve the EPC rating of your property. Some are simple, while others are more disruptive, which is why you should start undertaking this work when refurbishing your HMO properties.
Here are some of the most common ways to improve the energy efficiency of older properties:
- Insulation
- Boiler
- Glazing
- Renewable Energy
- Appliances
- Lighting
- Smart Meter
Insulation
For landlords, the government has recommended a “fabric first” approach for improving the energy efficiency of rental properties. This means wall, loft, and floor insulation should be a priority, and it’s a great place to start.
Check if your loft insulation is at least 270mm thick. Loft insulation will reduce the energy that can then escape through the roof. This is usually easy to install and relatively inexpensive.
Additionally, wall insulation, whether your property has a cavity or solid walls, and floor insulation are other ways you can further improve the energy efficiency of your property.
Boiler
If you have an old boiler, it could be beneficial to upgrade to a more energy-efficient model. This is a more costly change but could massively improve your rating, especially if you add a thermostat and programmer.
Glazing
If your property isn’t already double glazed, adding this throughout your property can boost its EPC score by up to 10 points.
Triple glazing is becoming more common and will further reduce the amount of heat that escapes through the property’s windows. However, if you already have double glazing, you’ll likely only gain a small improvement to your EPC score by upgrading to triple glazing, but this can help lower energy bills.
Renewable Energy
Adapting to renewable energy where possible could also help improve the EPC rating of your property. For example, adding solar panels or ground source heat pumps could be beneficial additions. These sorts of features might be particularly appealing to the most eco-friendly-minded tenants.
Appliances
Home appliances come with energy labels, which tell you how much energy that appliance uses through ratings on a scale of A to G. It’s important to also consider the size of the appliance as two different sized appliances with the same energy rating might use different amounts of energy.
Check the energy label of the appliances in your properties, and look at investing in the appliances with the best energy rate for the size that’s required.
Lighting
It’s also worth investing in energy-saving bulbs. Replace traditional incandescent bulbs with halogen, LED, or compact fluorescent lamps. There’s a higher cost for these kinds of bulbs, but it can be a quick and easy way to gain a few extra points on your EPC.
Smart Meter
The government recommends installing a smart meter in rental properties. Some energy suppliers provide these. Smart meters can give environmentally-minded tenants a real indication of their energy consumption and how they could make improvements. This could also help flag inefficient appliances on your property.
3. Figure out Costs and Funding
It can be helpful to get professional advice to see where your money is best spent. Once you decide what energy-efficient improvements need to be prioritised for your property, figure out how much this will cost.
You will likely need to get up-to-date estimates from a professional. Once you know how much the work is expected to cost you, figure out how you will fund the improvements.
Improving the EPC rating of your properties could help you get ahead of the potential changes and ‘future proof’ your HMO portfolio, while allowing you to make energy savings as well. The early adopters of this will certainly gain the advantage!
For more helpful tips and resources on starting, scaling, systemising, and future-proofing your HMO portfolio, join The HMO Roadmap today!
About the Author:
Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind and Smart Property, a specialist HMO property investment and management company. He writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!