Should I be worried about rising energy prices?
With energy prices rising, could landlords be hit twice?
You’ve probably already received an update from your energy supplier about what your new bills will be and although the government has capped typical household energy bills at £2,500 a year, from 1st October, you are going to see an increase in what you need to pay.
There are also plans to support businesses, charities, schools and hospitals to keep the heating on this winter, but that support doesn’t extend to landlords, who will be feeling the pinch in their residential bills, as well as in the possibility of rent arrears. Over 50% of UK households are already cutting back on gas and electricity use due to the cost-of-living crisis
We surveyed 1000 tenants and found that:
- 36% can afford to pay their bills at the moment, but are concerned about affordability in the future
- 40% said they are unlikely to afford the future increases in energy bills
- 17.8% are currently struggling to afford them now, before the October increase
How will the tenants struggle impact landlords?
Everything is on the rise, from rents to the price of food. Throw in another energy increase and your tenant’s budget really starts to tighten – which could put their rental repayments at risk, which is bad news for you!
- Make some improvements. Check your EPC for guidance – is there anything there that is a quick, cheap win that could drive up your EPC rating (after all, that minimum rating increase is coming!) and save your tenant some money
- Protect your investment. Invest in Rent Guarantee Insurance sooner rather than later. The pandemic saw RGI taken off the shelves because of the surge in claims as tenants were unable to pay their rent
- Take advantage of schemes. Schemes like the Official Boiler Upgrade Scheme can help you make energy efficient updates to your property, without breaking the bank
- Talk to your tenant. So many landlords don’t really have any relationship with their tenants, but in times like this, it’s good to have open communication so if your tenant is unable to pay and wants to talk about breaking their agreement with you early to find something cheaper, they feel comfortable having that conversation.
How can landlords save on their residential bills?
You’re probably just as worried about your rising costs as tenants are, so how can you try to keep your own personal costs down?
- Use energy wisely. This sounds simple, but take a moment to think about if you have any bad habits – do you leave lights on when you’re not in the room? Do you have multiple devices plugged in when you’re only using one? Can you shorten your showers or run your dishwasher more efficiently? Small habit changes can help you save over the course of the year
- Draught proof your home. Draughts are a drain on your energy – if cold air is coming in, your heating is going to be in competition with that! You can get professional draught proofing done for around £200-300, or you could do it yourself by checking for gaps around windows, doors and blocking those, as well as filling in cracks in floors and skirting boards
- Insulate Britain! How’s your insulation? It might be worth investing in upgrading your insulation to help your property towards energy efficiency
These are only small changes, but combined they can add up. However, the big thing that we recommend is not sticking your head in the sand. Don’t ignore your bills – read them thoroughly and call up your supplier if you think there’s a discrepancy.
Is there anything else that landlords need to worry about?
The EPC legislation changes are coming, probably in late 2024 – early 2025 and will see the minimum EPC rating required for renting a property go up to C from E. It’s estimated that this could cost the UK landlording industry up to £16bn.
While this change can seem a way off, it’s important to start planning and acting as soon as possible, in order to spread the cost.
- Check your EPC. Your current EPC will have recommendations for improving your score, so that’s your first port of call when planning your updates. There are bound to be a couple of quick wins in there! Don’t forget that when all of your updates are complete, you’ll need a new EPC confirming you are now C rated.
- Check your budget. Ensuring you can afford the upgrades needed is key. Take the time to plan out your cash flow so that you can spread the cost and avoid feeling the pinch. Our free Income and Expense Tracker can help you with this
- Do your homework. Educate yourself on what you can do to make your property more energy efficient so you can make the smartest upgrades. Our webinar on Friday 7th October at 3pm will be full of great advice for this!
It can feel like a scary time with everything going up, but keep a cool head and you can ride out this storm!