Better Rental Homes: A Win for Landlords and Tenants
There’s an interesting conundrum when it comes to improving the energy efficiency of rental properties — it’s often the person who owns the property who pays for the upgrades, while the tenant gets the benefit of lower energy bills.
For some property owners, that can make investing in energy efficiency harder to justify, particularly when the immediate return isn't reflected in the property's rental income or value.
It’s known as the “split incentive”, and it’s one of the issues Renew is looking at in its recent Fit to Rent report.
The report found that relatively straightforward improvements such as insulation, shading, draught sealing, efficient heating and cooling, heat-pump hot water and solar could reduce energy bills by around two-thirds to three-quarters in the NSW homes they modelled.
Renew is proposing mandatory minimum energy efficiency standards for rental properties, along with financial support and practical ways to help landlords make the necessary upgrades.
As Renew puts it,
“Renters can’t insulate a ceiling they don’t own, they can’t install solar on a roof that isn’t theirs, and so they bear the brunt of the discomfort and the power bills, while the upgrades that would fix both sit outside their control.”
But what's in it for landlords?
A home that is cooler in summer, warmer in winter and cheaper to run can be a more attractive rental property. Better comfort may contribute to tenants wanting to stay longer, while a well-maintained, thoughtfully designed home can help protect the long-term value and condition of the property.
There can also be less pressure on tenants' household budgets. If a home costs significantly less to heat and cool, more of their income remains available for other expenses — including rent.
And there's a broader point: energy efficiency is increasingly becoming part of what people expect from a good home. Rather than treating energy efficiency as an optional extra, designing it into a property from the beginning can make practical and financial sense.
We’ve put this into practice
PdD recently completed the design and construction of an eco rental property, specifically demonstrating how good environmental design can be incorporated into a rental home.
We’ll be sharing more about the project, including photos, on the PdD website soon.
Tune in to ABC Radio
Paul will be discussing the issue of energy efficiency, rental properties and the split incentive on ABC Radio at 8:45am on Friday 25 September.
If you're thinking about building or renovating an investment property, now is a good time to think beyond the immediate build cost and consider how the property will perform for both you and your future tenants. And with the ongoing discussion around negative gearing and investment property in Australia, making sure your property is well designed, comfortable and efficient could be more important than ever.
Thinking about an investment property or rental renovation? Get in touch with PdD Building Design. Lets talk about your project.
Comments