Insulation doesn't need to cost landlords the earth
The big issue that landlords have with the laudable aim of energy conservation is that, whilst the capital investment is incurred by them as the landlord; it is the tenant that effectively receives much of the financial benefit in the form of cheaper heating bills.
However, what landlords may not realise is that recent changes in the tax system means that individual landlords (and other landlords who pay income tax) who let residential property and install loft insulation, cavity wall insulation and solid wall insulation to properties have been able to claim a deduction in their income tax bill, this is called the Landlords Energy Saving Allowance (LESA).
The maximum amount which can be claimed is £1,500 per property. Following the 2006 Budget, from 6th April 2006 the Landlords Energy Saving Allowance (LESA) has been extended to enable landlords to also claim the allowance for expenditure from installing draught-proofing and for insulating hot water systems in dwelling houses which they let.
Further information is available from Her Majesty's Revenue and Customs.
Landlords do however need to be wary that they do not by improving their residential investment properties insulation, then cause damp problems through inadequate ventilation.
IMPROVING THE HEATING
The other way a landlord can keep their tenants warm and happy is by improving the heating. The vast majority of housing including buy-to-let investment properties now have central heating. In 2005 the English House Condition Survey found that just under 9 out of every 10 properties (88%) had central heating a further 7% had storage heaters.
The reality therefore for most landlords is that an improvement to the heating system involves an upgrade to the central heating system. The efficiency and effectiveness of a heating system largely depends on the type and age of the boiler, with most boilers lasting between 10-15 years. The difficulty for many landlords can be deciding when to upgrade to a new model. I was faced with this exact conundrum recently. I had a problem with a 10 years old boiler which packed up depriving tenants of hot water & heating making prompt action vital. The plumber suspected it was one of two parts the gas valve or the PCB board, both costing over £150 with fitting costs on top.
What did I do? Risk having one part fitted to find out it was actually the other that needed replacing? Then potentially having replaced 2 parts would I have been better off having a new boiler fitted at the outset? In the end I contacted the manufacturer and their technical department were able to run through a few diagnostic tests to pinpoint the part I needed. I am now hoping that the boiler lasts several years longer before it has to be replaced by a new condensing boiler.
Condensing boilers
Many landlords may not be aware that since the change in the Building Regulations in 2005 all newly fitted boilers have to be high efficiency, which generally means condensing boilers.
Condensing boilers are have also required to be fitted in Scotland since 1st May 2007 with the revision of section 6 of the Building Regulations.
A high efficiency condensing boiler works on the principle of recovering as much as possible of the waste heat which is normally rejected to the atmosphere from the flue of a conventional (non-condensing) boiler. The best high efficiency condensing boilers convert more than 90% of their fuel into heat, compared to 78% for conventional types. I found this useful site for a ranking of boilers in relation to their efficiency.
How do they work?
The extra efficiency is accomplished by using a larger heat exchanger or sometimes two heat exchangers within the boiler, which maximises heat transfer from the burner as well as recovering useful heat which would normally be lost with the flue gases. When in condensing mode (condensing boilers do not condense all the time) the flue gases give up their 'latent heat' which is then recovered by the heat exchanger within the boiler. As a result the temperature of the gases exiting the flue of a condensing boiler is typically 50-60°C compared with 120-180°C in a current non-condensing boiler. At the same time an amount of water or 'condensate' is produced.
The fact is if a landlord's boiler is between 10-15 years old then it probably is not efficient by modern standards. Replacing a landlord's old boiler with a new high efficiency condensing boiler is likely to save around a third of the heating bills straight away.
Costs
A new condensing boiler will cost about £750 inc. vat for a decent make.
However the additional plumbing kit will probably cost another £250 and then there is the fitting costs of at least £250. Bank on at least £1250.
Having purchased a new boiler landlord can then insure themselves against further maintenance costs by taking out boiler insurance.
I would caution landlords from automatically taking out this type of cover without carefully considering the benefits. This is mainly that it guards a landlord against an unexpected large bill. If a landlord's cash-flow is stretched then this might be the safe option. However landlords should appreciate that at a minimum of £100 pa the cost of the insurance over the lifetime of the boiler would amount to the entire replacement cost. Therefore, they may be better off setting up a monthly 'sinking fund' equivalent to that of the insurance. This way they can build up a cash fund that is available should disaster strike. Should this not happen then the money can go towards the eventual replacement cost of the boiler.
One thing is for sure, keeping the tenants warm and happy this Winter isn't getting any easier or cheaper!
