Returns on Property Energy Efficiency Upgrades


Rising utility costs and the new government requirements for rental property EPC standards are putting increased pressure on professional landlords.

Many may perceive that investing in property energy efficiency upgrades and new appliances is a sunk cost – but the reality is that a high-performance rental home with low running costs, excellent ratings and modern amenities may command a sizeable premium. The key is to assess your target tenant market and review potential rental yields and returns on upgrade investments to select the most viable projects.

Some estimates predict that a Band-D property requires an average spend of just under £13,000 to bring it to C-Band standards. However, picking profitable upgrades to reduce overall running expenses and achieve greater rental income could be a future-proof strategy.

Marketable Eco-Upgrades for Rental Properties

When we talk about eco upgrades, we’re covering a vast scope of potential projects, from replacing windows with double-glazing, installing a smart meter, fitting a brand new boiler to improving the property insulation.

Below we’ve considered some of the popular options with a glance at average costs and the cost saving to the tenant.

Where that reduced running cost can be transferred into an elevated rental premium or incorporated into an inclusive rental charge (where the landlord covers utility costs and council tax), a significant efficiency may be available.

Replacing Outdated Appliances

There is little doubt that a rental property that comes onto the market with top-end, contemporary appliances will attract greater interest from quality tenants.

Regulations dictate that appliances such as electric ovens, freezers, fridges, TVs, washing machines, boilers and even light bulbs need to declare an energy rating on the label, from A to G, with G the least efficient. An LED bulb lasts for around 25,000 hours, compared to 1,000 hours for an old incandescent bulb – so along with fire safety improvements, this easy replacement could instantly reduce tenant energy bills.

The average cost to replace a boiler is around £2,750 – but there are a few other alternatives worth considering.

  • Buying a magnetic filter for a heating system costs just £80 to £130 and can considerably extend the lifespan of an existing boiler by preventing a build-up of waste.
  • Thermostatic radiator valves cost around £15 each and can be fitted in every room to prevent overheating and control energy consumption.
  • Heat pumps can reduce household energy bills by up to 20%.

One option is to use the Boiler Upgrade Scheme to subsidise larger projects, with grants available on heat pumps for landlords up to £5,000 for an air source pump or £6,000 for a ground source pump. Most heat pumps cost around £6,000 for an air source heat pump or approximately £10,000 for a ground-source heat pump.

The grant will cover the bulk of the costs and provide energy savings of roughly £400 per year – increasing tenant satisfaction, boosting the appeal of your property, and making it an efficient asset for the long term. If a boiler is approaching the end of its life and needs replacing, this could be an opportune time to minimise the cost.

Double Glazed Windows and Doors

The next project to consider is replacing older single glazing with double-glazed windows, providing efficiencies up to 20 times greater than thin glass.

Insulated windows prevent heat loss and have the dual benefit of preserving existing warmth and preventing tenants from using central heating systems for most of the day.

Double glazing is a suitable upgrade to meet energy-efficiency standards but is also an excellent feature to use within your property marketing details due to:

  • Noise reduction: ideal for homes near busy roadways, schools or train stations.
  • Security: thicker double glazing is suitable for families with younger children due to breakage resistance and provides better protection from thefts.
  • Temperature control: the glazing keeps a property cooler in summer and warmer in the winter.

Landlords might also decide to fit double glazing since it will conserve the furnishings in the property. Repeated exposure to UV rays can cause damage to carpets, curtains and furniture, whereas double glazing will prevent this wear and tear.

The Energy Saving Trust recommends tenants prioritising energy efficiency when shortlisting potential rental properties. This is certainly a factor that long-term tenants will factor in when deciding whether to make an application.

Improved Insulation

Insulation, particularly in loft spaces, is not a cheap project. Still, professionally fitted insulation will last 40 years or more as a long-term initiative to boost efficiency, meet those forthcoming standards and make your rental asset easier to run. There is another possibility here because an insulated loft is eligible for a full conversion.

Although the work will require a greater investment, marketing a home with a converted attic, suitable as a home office, playroom or extra bedroom, could add a sizeable amount to your rental income.

Loft insulation makes a property around 25% cheaper to heat, whether or not you decide to convert the space or keep it as a storage area.

Landlord Energy Efficiency Requirements

We have written before about the changes to EPC certificate requirements, which will begin in 2025, but this may be a positive for landlords who proactively ensure their residences meet the new standards.

Adding additional eco-features such as EV charging points is also a compelling selling point for many tenants, particularly professionals who use low-emission vehicles to commute and will pay a premium for a quality home with an existing charging station. The other side of the equation is that some landlords, where a property is in poor condition and would need a substantial investment, may opt to sell the property.

While much of West Sussex is in incredibly high demand, this increased scarcity could result in better rental rates across the UK for landlords with energy-efficient properties marketed to an expanding pool of potential tenants.

Fewer properties immediately leads to increased profitability, with average rental prices already rising by 8.6% between 2020 and 2021, excluding London.

Investing in Rental Property Energy Efficiency Upgrades

For more advice about potential property energy efficiency upgrades, the cost of the investment, and anticipated returns in rental yields, please get in touch with us.

Although landlords will need to uphold higher efficiency standards, this also presents an opportunity to apply for grants and subsidies to upgrade existing properties. Many tenants will happily pay more for an exceptional home in a prime location with state-of-the-art insulation, noise reduction, modern appliances and heating systems, safe in the knowledge that the property will cost less to run and be a comfortable, safe, economical home for the foreseeable future.