With the recent hike in energy prices and planned government changes to Energy Performance Certificate requirements in the rental sector, as an Edinburgh landlord, you might want to consider alternative energy sources when upgrading your property.
Not only are renewable energy sources better for the planet but they also offer a unique selling point for tenants – permanently lower bills that won’t be impacted by global fuel prices or the whim of utility companies.
Balancing the financial benefits for landlords
The cost of installation has to be carefully weighed against the financial benefits for a landlord, but the potential to charge higher rents and offer greener options to tenants may make it worthwhile for some. Investment in renewable energy can future-proof the property and get ahead of the game with planned government changes so it’s a strong option for landlords who intend to retain their properties for a long period.
Solar panels for your rental property
Solar panels are probably the best-known form of renewable energy. Perhaps surprisingly they don’t require constant sunshine, just daylight, so they work effectively even in Edinburgh’s frequently grey skies. They do, however, generate most power on south-facing properties and require fairly extensive roof capacity to accommodate the photovoltaic panels.
Solar panels cost around £6,500 for the average home but under the smart export guarantee (SEG) scheme launched in January 2020, homeowners can get paid for the energy they don’t use (this is also true for other forms of renewable energy). The amount paid depends on the local energy company but the Energy Saving Trust estimates a profit of £80-£110 a year.
Not all homes are suitable for solar panels – those with diagonal south-facing roofs are the most effective and a roof that is unshaded between 10am and 4pm will produce most electricity. Planning permission isn’t usually needed but the initial outlay means it’s only worthwhile for those who don’t intend to move house in the near future.
Hydroelectric and wind energy are more commonly used on a mass scale but there are smaller domestic versions that can be employed with the right conditions.
Anyone living near a lake or river can potentially create enough power to fuel an entire home with a small hydroelectric plant that requires only a one-metre drop. And in an exposed area with frequent high winds, a 6kW pole-mounted wind turbine can generate enough power to save hundreds of pounds on bills.
Harness The Heat
Air and ground source heat pumps are another viable solution that are growing in popularity and can be accommodated in most properties, even older terraced houses, although considerable installation work may be required.
Heat pumps act like reverse fridges, drawing the energy from their surroundings and concentrating it to provide heat and hot water. While installation can pose challenges, they rarely malfunction and are a reliable alternative to a gas boiler.
The UK government plans to ban gas boilers in new-build homes from 2025 and phase out all gas boilers in other properties from 2026. Electric heat pumps are the stand-out favourite as an alternative to traditional boilers, but prices are far higher – starting at around £6,000. However, it may be worth the investment for landlords as a long-term solution that will future-proof their property.
The independent Energy Saving Trust provides information and advice about heat pumps and other green energy sources, with in-depth details about how they work, how much they cost and how much they can save on energy bills.
Buying a home that’s already energy efficient opens up the option of a green mortgage which rewards the purchaser with a better interest rate or cashback. Traditionally these haven’t been available for buy-to-let mortgages but providers including Nationwide and Barclays are now offering this option.
For advice about investing in Edinburgh property or upgrading your buy-to-let, schedule a call with the city’s leading letting agent, Clan Gordon.
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