How can landlords and letting agents prepare for cold weather and energy bills?
As temperatures lower and bills rise, Rik Smith, Goodlord’s Director of Tenancy Services, outlines the year ahead for all things energy.
We’re buckled into the classic British January weather. With a harsh, cold, and wet winter, this is the time of year for letting agents and landlords to get up-to-speed with how this affects bills.
Of course, January 2024 saw the latest increase in energy bills, with average yearly payments increasing by £94 to now £1,928.
So what do agents and landlords need to know and how can they prepare for the upcoming cold weather?
- What is currently happening with energy bills?
- What can tenants and landlords look out for this year?
- What is the Boiler Upgrade Scheme?
- What will happen with EPC targets in 2024?
What is currently happening with energy bills?
Energy bills are mostly set by the regulator and, effectively, by the government. Ofgem uses an actual spreadsheet, which is a designed and agreed mechanism to calculate the standard variable price.
Very few households are on fixed energy deals these days. Over 90% of people in the UK are actually on a variable tariff. So, because energy tariffs are on this mechanised clockwork system, analysts can attempt to forecast what will happen to energy prices in the future.
In 2024, the expectation has been for energy bills to remain relatively flat. Energy bills may go up and down quarterly by a few percentage points each quarter.
However, what if there's another price shock? Then all these forecasts go out the window, and we can only hope - for your landlords’ and tenants’ sakes - that they don’t. There are early indications that wholesale energy prices have started to soften, if sustained this may feed through to lower bills later in the year
What can tenants and landlords look out for in 2024?
Letting agents can help landlords by staying up-to-date and informed on the schemes available, including:
- The government can trigger Cold Weather Payments to pensioners, which can mount up quite substantially for older renters.
- The Warm Home Discount offers £150 to consumers, although it does require an application and effectively says you need this support.
- There are insulation schemes available, such as the Eco 4 scheme. But that's dependent on where the property is located, what the EPC rating is, as well as potentially the tenants living in the property.
- There are some schemes out there, like the Boiler Upgrade Scheme, which can be accessed through installers, energy suppliers or your local council.
What is the Boiler Upgrade Scheme?
From September 2023, the government has offered £7,500 towards replacing boilers in houses with renewable heat alternatives. This includes either air, ground, or water source heat pumps, or even biomass boilers, and will be available to households until 2025.
The Boiler Upgrade Scheme is very much something worth looking into if landlords think their boiler might need to be replaced, maybe not now but next winter. Planning to replace or upgrade it and taking advantage of some free money may well be to your advantage.
Ultimately it is very much a matter of an open transparent conversation, which should be encouraged between tenants and letting agents, and talking to those energy suppliers who are more often than not the ones who can help you access this scheme.
What will happen with EPC targets in 2024?
In 2020, the government announced plans to increase Minimum Energy Efficiency Standards, with the idea that in 2025 all new tenancies in the UK lettings market were supposed to have an EPC Level C or better. However, these plans were scrapped in September 2023 in Prime Minister Rishi Sunak’s speech on Net Zero targets.
Under the current government, it seems as if landlords and letting agents have been left in limbo as to whether they will continue this plan. In other words, the proposed tightening of EPC targets to level C have kind of been kicked into the long grass for now.
However, with a general election pending in 2024, it’s important to consider what’s proposed by Labour. Last year, the party proposed a Warm Homes Plan, to upgrade homes and reduce energy bills, and a plan to create Great British Energy, a publicly-owned clean energy company.
Yet, according to research from the Mortgage Advice Bureau, homes with a high EPC rating are becoming important for prospective tenants. So having energy-efficient properties should still be considered a priority for landlords who want to attract eco-conscious tenants or those who want to pay less for utilities while still remaining warm and comfortable at home, despite the government’s lack of direction.
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