Question no. 1:
What do all landlords want?
Answer: to improve their property investment.
Question no. 2:
What do all house buyers want?
Answer: see answer to question No. 1.
And you, dear agents, can help them make those improvements to their properties without getting them to dip into their pocket.
How so? Green Deal. Yes, I know: the words don’t fill you with unbridled enthusiasm. I am not unsympathetic. Since its launch at the beginning of last year, it is no secret that the programme has been shrouded in misunderstanding.
But, actually, the Green Deal concept can be summarised quite succinctly. It is a long term scheme to make Britain’s properties more energy efficient. Very long term. Other initiatives come and go, but there is no end date for Green Deal. So, however sick you might be of hearing about it, get your head out of the sand. Green Deal is here for the long haul.
And with very good reason. The UK has some of the oldest housing stock in Europe: poorly insulated buildings which leak heat through their walls, windows and roofs, and which consume too much energy. The government is determined to sort it all out and build a less wasteful, energyefficient society in which people can get their energy bills under control.
To be frank, it has little other option. On average, household energy bills are rising at between seven and ten per cent annually, which could mean that ten years from now, we will be paying twice as much to heat our properties as we do today. We can rest assured that people’s salaries will not have doubled by 2024…
How it works
Like the concept, the mechanics of Green Deal are also less complicated than is sometimes assumed. Energy improvement works are funded by a loan repaid through the customer’s electricity bill.
Put another way, they are either not paid for upfront, or with very little outlay. And once they are complete, the tenant or homeowner’s heating bills reduce because they are living in an energy-efficient home.
For landlords the benefits of the scheme are obvious. You can market your greenedup investment to tenants as a home with reduced energy bills. It hardly needs stating that the difference between forking out, say, £100 rather than £150 for utility bills every month, means a lot to the average tenant.
And, of course, you are not paying to look after the long-term investment that is your property. Cavity wall insulation, a new boiler, new electrics – whatever energysaving works the Green Deal assessment recommends, you won’t be paying for them upfront. If that isn’t a win-win situation, I don’t know what it is.
And don’t forget April 2016. That is the date from which you will be unable to ‘reasonably refuse’, as the Energy Act puts it, requests from your tenants to improve the energy efficiency of your property. And two years after that, all rental properties must be brought up to an EPC rating of E – or landlord penalties imposed.
Now, estate agents. Once a property has been sold, you never usually contact the buyer again, right? Well, now you have a big incentive to do the contrary, to continue the relationship.
Here’s why. We have already agreed that all homeowners want to improve their property investment, their biggest asset. Well, it hardly needs stating that they also want lower gas and electricity bills, too. If you explain how Green Deal can help them do that, gas-elec, and I am sure other Green Deal Providers, will pay you an introduction commission. You get commission when you refer mortgages, insurance and household maintenance policies, so start earning some Green Deal referral fees, too.
And sometimes, the buyer will need those energy-saving works done pronto. As you know, when a surveyor inspects a property for mortgage valuation he’ll use the red, amber and green ‘traffic light’ system to rate the condition of various parts of the building. Put another way, if he has concerns about that twenty-year-old boiler, or condition of the roof, he’ll flag them up. In some cases, mortgage companies will hold back, say, five per cent of the loan for a few months until the works are done. That’s when you jump in and explain to the buyer how Green Deal can help them release all of the funds they need to buy their new home.
Whether you like it or not, when it comes to property investment, the future is green.
John Davidson is MD of Gas-elec, a gas and electrical safety inspection company providing services and energy-saving products for the rental sector and home. The company is also a Green Deal Provider and Installer. www.gas-elec.co.uk