23 May 7 Schemes to help fund EPC upgrades for landlords
If you’re a landlord you’ll no doubt be well aware of the government’s continued drive to improve the energy efficiency of properties in the private rented sector, within the wider context of reducing the country’s carbon footprint. Buy to let properties, or properties with new or recent tenants, will lawfully need to be upgraded to EPC Rating of C in 2025 (from current rating of E), while dwellings with existing tenants have until 2028. Whether you need to upgrade by 2025 or have a bit more time and can therefore spread the costs, upgrading your portfolio is now even more important than ever.
While the current spending cap on improvements sits at £3,500 including VAT, it is looking like the government will bump this up to £10,000 in the near future. And the consequences for not making improvements are reported to be up to £30,000. We outline below 7 schemes to help you get financial support for upgrades to your private rented properties.
1. The Boiler Upgrade Scheme (England and Wales)
One grant per property is available to help cover the cost and installation of low carbon heating systems such as heat pumps. Acting on behalf of property owners, installers can apply for:
- £5000 off the cost and installation of an air source heat pump
- £5000 off the cost and installation of a biomass boiler
- £6000 off the cost and installation of a ground source heat pump, including water source heat pumps
Your property may be eligible if it has an installation capacity of up to 45kWth – which covers “most homes” – and a current EPC with no outstanding recommendations for loft or cavity wall insulation.
£450 million of grant funding is available for properties in England and Wales over three years from 2022 to 2025, so get in early to secure this funding. You can read more about how to access the funding on the government’s website: Apply for the Boiler Upgrade Scheme: Overview – GOV.UK (www.gov.uk)
2. VAT relief on energy saving materials (England, Scotland, and Wales)
Lasting until 31 March 2027, properties will benefit from zero-rate VAT on the installation of certain energy saving materials, ranging from draught stripping and insulation to solar panels, air source heat pumps and ground source heat pumps. This can also extend to other supplies involved in the installation, e.g. new radiators and pipework that are installed at the same time as the air source heat pump, which are needed in order to benefit from the heat pump.
Your supplier should charge you at the reduced rate so it is important to choose a certified installer with expertise in providing the right solutions for your rental property.
Find the full list of the eligible materials and works on the government’s website: Energy-saving materials and heating equipment (VAT Notice 708/6) – GOV.UK (www.gov.uk)
3. A Green Deal Loan (England, Scotland and Wales)
The Green Deal Scheme was originally a government initiative that ran from 2013 until July 2015, when the government stopped supporting the Green Deal Finance Company. Some private companies continue offering Green Deal loans, however, so it is still a viable option. The loan was designed to be paid back through the savings made on energy bills. The loan can be put towards a variety of improvements, such as insulation, heating, draught-proofing, double-glazing, or renewable energy generation, such as solar panels or heat pumps.
The repayments on the loan shouldn’t exceed the savings you make on your energy bill, but that doesn’t mean that your energy bill savings will match the loan repayments, as it doesn’t take into account increases in energy prices. It’s worth also noting that the loan is linked to the property so it would pass to the new owner if you were to sell up.
4. Energy Company Obligation Grants (England, Scotland and Wales)
If you have any qualifying tenants from low-income and vulnerable households, they may be able to access an Energy Company Obligation (ECO) grant to support energy efficiency improvements. If your property has an EPC F or G rating, the grants must go towards upping that rating to band D or above, and the funding for private rented properties will support “the least efficient homes in bands E-G only”. The government has shared that the fourth edition of the ECO “will upgrade around 450,000 homes, most of them to EPC band C” over the next four years.
Find out more about ECO4 eligibility at: ECO4 Scheme | Energy Company Obligation Explained (ukenergysupport.co.uk)
5. Empty Property Grants (Regional funding)
There are also grants and incentive schemes available from local councils to make energy improvements to your properties, as they are committed to reducing the number of empty properties, and bringing them back into residential use. For example, the empty homes grant in Kingston, can help cover up to £25,000 for thermal upgrades to windows, boiler work and insulation, on properties that have been empty for at least six months.
There may be certain restrictions through local schemes – such as not being able to sell the property within five years of receiving the grant and having to rent the property through the council’s private leasing scheme for that five-year period – but, if you’re in the private rented sector for the long haul, looking into any similar local schemes could be an option. Head to your local council’s site to see what schemes may be available.
6. Smart Export Guarantee (England, Scotland and Wales)
If your properties already have renewable energy, the Smart Export Guarantee (SEG) pays customers for renewable electricity they’ve generated and put into the grid. This could be: solar, wind, hydro, micro combined heat and power, and anaerobic digestion.
Some of these energy sources may also be covered by the zero-rate VAT mentioned in point 2 above, if you’re considering upgrading to renewable energy. You’ll need to sign up to an SEG tariff with a big energy company, to ensure you’re not simply giving away your energy to the National Grid for free, and should shop around for the best tariff too. Search “smart energy tariff” and energy suppliers to see what may be available for you.
7. The Great British Insulation Scheme (previously called ECO+)
The Great British Insulation Scheme – an extension of ECO4 – aims to upgrade and insulate the least energy efficient homes in Great Britain to help bring down people’s energy bills. The scheme will provide grants to support those on the lowest incomes and those living in the least energy efficient homes or the lower council tax bands to insulate their homes (80% of the funding will be available to households with EPC D ratings or below and in the lower council tax bands).
Working with energy suppliers, the UK Government has said the scheme will start in summer 2023, and it’s intended to run for three years until March 2026. It has £1 billion in funding. The cost of delivering the scheme from when it starts until March 2024 will come from the Energy Price Guarantee.
Find out more about ECO+ here: https://energysavingtrust.org.uk/what-is-the-great-british-insulation-scheme-eco-plus/
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