A big opportunity has opened to buy-to-let landlords, which encourages to carry out energy saving improvements without having to pay for the works upfront.
The way the deal operates is that effectively a landlord can gradually reduce or write off the cost of the works over a period of several years, in a relatively low, fixed interest rate loan. This is paid back through the savings on the utility bills of the property, associated by the works such as electricity. The landlord and/or agent will have to seek permission from the tenant in order to make this workable and in the same respect the tenant, requires the landlords permission before having the Green Deal assessment and instigate any works.
In a nutshell:
The current Green Deal allows up to 45 types of improvements
Heating, ventilation and air conditioning
Installing these measures may not have an immediate effect on your capital growth but it certainly will have an effect on the lettibility of your property in the long term. As tenants become more educated and savvy about how these energy saving improvements affect their pocket, they will inevitably become more choosey about in which property they would like to live.
In order to find out how your property holds up, in terms of energy efficiency, there are a number of agencies that will evaluate the property and recommend various measures (if any) which would best suit your property. Every company charges different prices but you would not be far off the mark if you paid around £150+vat for the report. This is the starting point and what will determine the next step.
As with all government backed scheme, there comes slight snag. Landlords will have to choose to use a small pool of contractors from its approved list. This means that there is no scope for a landlord to use a tried and tested, or even less expensive contractor of their own choosing. Another potential draw-back, is the effect of the financial charge or levy on future lettings. The existing tenants will certainly enjoy the benefits of the works in some respects but they will still be paid the normal electricity bills. So how does this benefit the tenant financially? Also any new tenant that moves into the property could see this as paying off the landlords works and therefore may demand a reduction in rent. This is yet to be proven but these potential issues have crossed our mind.
The government run scheme is dangling a carrot in front of landlords at the moment to encourage them to take the lead. While the scheme is not compulsory, it will not be too long before the carrot are exchanged for the stick approach. Under new legislation, there are proposed plans are that by 2016, landlords will be unable to refuse any reasonable requests from their tenants to sign up for the scheme. Also by 2018 landlords with poorly rated properties (F or G rated) and will be unable to let their property. This maybe an unfair footing next to the homeowner but tenants are also likely to become more discerning without this legislation.
Any landlords who are interested in looking further into the deal in more detail, we recommend they discuss this further with the following companies.
DeMachin Ltd will be happy to support our clients in this process by arranging access for the reports to be conducted and a standard information sheets with the sources of best information including providers, contacts etc, so that all your questions can be satisfied.