What the Green Homes Grant means for landlords

The slew of new schemes introduced as part of Rishi Sunak’s Summer Statement will be beneficial not only to tenants and homeowners, but to landlords too. 

The first announcement was the stamp duty holiday for purchases on second and additional homes, which means that stamp duty for second homes will be reduced to just 3 per cent on homes up to £500,000 until the end of March next year.

His second announcement, however, could have even more substantial long-term ramifications. We’re referring, of course, to the Green Homes Grant. But what exactly is the Green Homes Grant, and how can landlords take advantage of it?

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The Green Homes Grant explained

The Green Homes Grant is a scheme introduced by Chancellor Rishi Sunak in July that aims to help 650,000 homes become more energy-efficient and enable each of those homes to save an average of £300 annually on energy bills. It’s a move he described himself, rather dramatically, as being the carbon-cutting equivalent of taking 270,000 cars off the road. Strong words, perhaps, but it is a major step towards the Government’s eventual goal of reaching net-zero carbon emissions by 2050.

For homeowners and landlords across the UK, the grant means they will be able to apply for funding towards energy improvements to their homes, which will be dished out in the form of vouchers. It’s something that landlords have long campaigned for as it won’t only benefit landlords, but also the tenants themselves. Greener homes mean lower utility bills, and lower utility bills mean happier tenants.

The grant represents a spend of £2 billion and will provide at least £2 for every £1 spent on making a home energy-efficient, up to £5,000 per household. In real terms, this means that for an improvement costing £5,000, a landlord would pay £1,667 and the Government would cover the remaining £3,333. It would appear there is no limit on the number of households either, which means that landlords with larger property portfolios could potentially be saving several thousand pounds on updating their properties.

Ben Beadle, chief executive of the NRLA, said of the grant:

Improving the energy efficiency of rental housing is good news for tenants, landlords and local economies. We encourage all landlords to make use of this as it will mean housing standards are improved, tenants will save money and it will reduce carbon emissions across the whole sector.” 

– Ben Beadle, chief executive of the NRLA

What should landlords be doing to prepare themselves, and what green upgrades should they be focusing their attention on?

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Taking advantage of the great green gambit

Back in 2018, the Domestic Minimum Energy Efficiency Standard Regulations (MEES) were introduced as a means of improving the energy-efficiency of all private rented properties in the UK. However, to avoid the potential £4,000 penalty, landlords were only required to achieve an Energy Performance Certificate (EPC) grade of E or higher.

This is a good opportunity to shift that E grade up a few notches. A rating of D or higher will attract more eco-friendly tenants and given that 42 per cent of tenants take into consideration eco-friendliness when choosing a new property, that’s no small advantage.

 

What’s covered?

The Government recently published updated information about the scheme, which outlined what would and would not be covered. It was confirmed that the grant will offer vouchers to homeowners and landlords towards certain upgrades, repairs and installations. 

One notable omission from the list is gas boilers, which Martyn Bridges, director of technical communication and product management at Worcester Bosch, believes is a grave oversight.  However, Russell Smith, founder of Retrofit Works, believes it’s part of a move to encourage us to move away from gas boilers and towards more economical “ground source and air source heat pumps instead.” 

Here, we’ll cover just a few of the potential eco-friendly upgrades covered by the scheme, which are divided into two categories – primary and secondary measures. Note that homeowners must install at least one measure from the primary category in order to qualify for the vouchers.

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Primary

 

Insulation

One property upgrade that will definitely be covered by the grant is loft and wall insulation (if your properties have cavity walls). Insulation of a depth of at least 270mm can significantly bring down heating costs but as it’s quite costly and disruptive to install, it’s something many landlords choose to put off.

Note that pipe insulation (or lagging) is also something you might want to consider, particularly in older properties.

What the Green Homes Grant means for landlords

Solar panels

As with the LED bulbs, it’s unclear yet whether or not solar panels will fall under the remit of the grant, but if they do then you could be saving as much as 50 per cent off your energy bills.

What the Green Homes Grant means for landlords

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Secondary

Double or triple glazing

Most modern properties will have double-glazed windows installed as standard now, but to further improve the heat retention of your properties, now might be the ideal time to invest in triple glazing. 

What the Green Homes Grant means for landlords

Heat pump installation

Whilst they might not yet be common in the UK, the use of heat pumps as an alternative and more energy-efficient heat source is widespread in Sweden. These pumps work by drawing heat in from the outdoors and create three units of heat for every one unit of electricity used.

 

Heating controls and draught proofing

Thermostats and smart heating controls would be counted in this bracket, as would energy efficient doors and draught proofing.

 

Regardless of how you plan on using your voucher, though, with the world moving in an increasingly green direction, there has never been a more opportune time to cash in on the green pound.

If you’re looking for more information on how to improve the energy-efficiency of your properties and take advantage of the new green deal, we offer detailed advice on how to be an eco-friendly landlord and how to make older properties more energy efficient.

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