Have you ever read an article on energy and thought “well that all sounds great, but does it even apply to my business?” It’s a question that we hear so often from our clients that we’ve decided to do something about it.
Moving forward, we’ll be focussing on answering questions key to your industry. Whether you’re a landlord of a two-bedroom apartment, the owner of a chain of luxury hotels or even running a largescale industrial site, we’ll tackle the issues closest to your heart.
For our first feature, we take on energy from the perspective of landlords, especially those in the Private Rented Sector (PRS).
Although you might be reading this thinking you have everything in order, recent statistics revealed that many aren’t. The UK government believes that the PRS contains some of the poorest insulated, energy inefficient buildings throughout the UK. It was also revealed that 20% of households in the English PRS are fuel poor and 5.8% of them have the lowest ranking for energy efficiency (G).
Managing a property portfolio is complex and time-consuming and when it comes to your energy strategy, there are a host of options available. Who should purchase and manage the energy? What should be installed in the property? Is there any help available to you?
In the following piece, we’ll address them all.
Is it better to do one property at a time? Or buy in bulk?
You should always look to buy in bulk. Traditionally, when negotiating with energy suppliers, the higher consumption, the lower the unit rate. Remember, suppliers want your business. The more sites you put through them, the more valuable you become as a customer.
Arranging energy contracts for multiple properties at the same time is likely to prove far more cost-effective over time.
Should I install a prepayment meter? Or a credit meter?
Credit meters, where users are billed monthly or quarterly for their energy usage, are still by and far the most popular method with UK landlords. Whilst prepayment meters operating on a “Pay As You Go” basis can protect landlords from outstanding bills left by outgoing tenants, the unreasonably high energy tariffs often imposed upon prepayment users by energy suppliers is a huge deterrent.
The expensive nature of the meter could even go as far as discouraging tenants from your portfolio, with some unwilling to rent from properties with a prepayment meter.
Should I arrange the energy on my tenant’s behalf? Or leave them to get on with it themselves?
You need to be aware that ultimate responsibility for the bills lies with the person whose name is on the bills – if it’s your name on the bills and if your tenants, unbeknownst to you, build up substantial debt with the supplier and then leave the property, it’ll be you that’s left to foot the bill. By arranging the energy contracts, yourself, you’ll have a clear view of exactly how much is owed and you can ensure that your tenants are paying as much as they should be.
If you choose against negotiating contracts yourself you increase the risk of tenants ending up on poor terms, especially dreaded out of contract rates.
If tenants are paying the bills, do I really need to investigate energy management?
You might not be paying the bills directly, but efficiently managing energy across your properties could provide a plethora of benefits.
A reduction in usage is inevitably reflected in your energy bills. Due to affordability, lower overall monthly costs will not only increase interest in a property, but also decrease the turnover of tenants.
You should also consider the condition of your properties. Poorly insulated properties suffering from damp and other issues can cause long-term damage to the structural engineering of the building.
Is there financial support available for landlords?
There certainly is! There are many government-backed grants for businesses looking to lower emissions. If you’re a UK landlord, the Green Deal should be top of your agenda.
The Green Deal was introduced to help landlords and homeowners make energy-saving improvements, such as insulation. This scheme lets you pay for some (or all) of the improvements over time via your electricity bill. It enables you to make energy efficiency improvements without having to pay all the costs upfront. Tenants will repay the cost of the measures through their energy bill savings whilst enjoying a more energy efficient home.
Please note, for a Green Deal to be set up, both you and your and tenant must give permission. Bear in mind that as responsibility for paying the energy bill reverts from the tenant to the landlord when a property becomes vacant, so too will the Green Deal repayments during vacant periods.
Do my properties require an Energy Performance Certificate (EPC)?
As of the 1st April 2018 there is a legal requirement for properties rented out within the private sector to have an Energy Performance Certificate (EPC) with a minimum energy performance rating of at least E. To get an EPC for one of your properties, you would need to speak with an accredited energy surveyor to have one produced (you can also discuss this with an energy consultant who is already working alongside you to manage the portfolio).
This differs somewhat to a Display Energy Certificate (DEC), which is the responsibility of the occupier.
This blog was brought to you by Great Annual Savings (GAS). An expert in the energy field, GAS produces a wide-range of informative business energy-related content, accessible via the Business Advice Hub.