Retrofitting rental homes in the UK has the potential to boost the economy, according to a recent study. The government has set a goal for the country to achieve net zero carbon emissions by 2050, with intermediary targets of a 68% reduction by 2030 and a 78% reduction by 2035 compared to 1990 levels. However, there are several challenges when it comes to decarbonising homes, particularly in the owner-occupier market, where costs are a major barrier to making green home improvements.

To encourage retrofitting, government regulations have focused on the private rented sector. Minimum Energy Efficiency Standards (MEES) have been implemented, requiring private rented properties to have a minimum energy performance rating of EPC band E. The government has proposed increasing this requirement to EPC C or above by 2025 for new tenancies, and by 2028 for all tenancies.

A recent analysis of Energy Performance Certificate (EPC) data conducted by Propflo, a decarbonisation platform for lenders, reveals that if privately rented properties below an energy rating of C undergo complete retrofitting with all recommended improvements, the UK economy could benefit by at least £28 billion at a cost of £23 billion, resulting in a net gain of £5 billion.

However, if landlords choose to undertake only the minimum work to comply with the proposed MEES, the economic gain would be £8.7 billion against costs of £13.9 billion, resulting in a net economic cost of £5.2 billion. This highlights the importance of incentivising landlords to exceed the minimum requirements to fully unlock a property’s energy efficiency potential.

The analysis of EPC data takes into account the costs and lifetime energy savings. However, it doesn’t consider additional benefits such as increased property value, mortgage and tax savings, job creation, and improvements in energy security, health, and overall well-being.

The study reveals that over 80% of privately rented properties below a C rating would require spending close to or at the £10,000 cap. However, 2% of properties would only need an average expenditure of £311 to achieve compliance, while another 6.2% would require an investment of £1,514 per property.

The analysis also shows that 81% of properties within the scope of the study have at least one low-cost energy efficiency improvement recommendation, such as energy-efficient lighting or loft insulation. Approximately 0.2% of properties only require a single low-cost improvement to achieve a grade C rating.

Furthermore, about 0.6% of properties may be eligible for exemptions due to high costs or third-party consent, and 7.7% are within the scope of the wall insulation exemption, subject to expert advice confirming that the work would not impact the building’s structure negatively.

The analysis comes as the deadline for meeting the new MEES regulations, expected to be announced later this year, could be relaxed.

Luke Loveridge, Founder and CEO of Propflo, highlighted that MEES should be seen as both an economic opportunity and a means to enhance energy security, address fuel poverty, and meet carbon targets. Loveridge suggests that the government should explore ways to provide support to private landlords, enabling them not only to meet the minimum standards but to exceed them.

Overall, the findings of this study indicate that retrofitting rental homes in the UK has the potential to not only improve energy efficiency and reduce carbon emissions but also provide economic benefits. By incentivising landlords to surpass the minimum requirements and providing support, the government can unlock the full energy efficiency potential of properties and contribute to the country’s carbon reduction goals.