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Property Hawk

KEEPING TENANTS WARM

How can landlords keep their tenants warm this winter?

“Save on heating bills, put them on the fire” I‘ve heard one landlord remark.  Property Hawk clearly has a slightly more responsible attitude.

Seriously with the last vestiges of the ‘Summer’ disappearing, a landlord’s thoughts naturally turn towards securing their buy-to-let investment property for the Winter.  This probably means a landlord trying to get the various outside jobs done before the weather turns.

One concern for any responsibly landlord is to ensure that the tenants are warm.  This is not only a concern but also a legal obligation under section 11 of the Landlord & Tenant Act 1985

“(c) To keep in repair and proper working order the installation in the dwelling for space heating and heating of water.”

Whilst this legislation does not set out any legal minimum in terms of temperature, keeping tenants warm does make good business sense.  A warm tenant is a more likely to be happy tenant and therefore more likely to stay longer.  A cold tenant is very likely to be off as soon as they can, exposing the landlord to a possible void period and to additional letting costs.

There are two ways that a landlord can make their property warmer.  Firstly a landlord can insulate their buy-to-let investment property more effectively and secondly a landlord can look to increase the effectiveness of their heating system.

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INSULATION


Many buy-to-let residential properties particularly the older buy-to-let properties have substandard insulation.  There are a number of ways that a landlord can improve the insulation of their buy-to-let investment property.  The main ones are:

  • Cavity wall insulation
  • Insulation in the loft
  • Draft proofing
  • Pipe and tank insulation
  • Glazing – normally installation of UPVC double glazing


There is some excellent advice on the Energy Saving Trust website on the kinds of ways landlords can insulate their investment properties, the costs involved and the potential financial savings.

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Insulation doesn’t need to cost 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 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 aware of that they do not by improving their residential investment properties insulation then cause damp problems through inadequate ventilation.

IMPROVING THE HEATING


The other way of 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.  Most boilers last 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 year 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 Stelrad Ideal 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.  For the full building regulations on heating boilers see here.

Condensing boilers are 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 like a Worcester Bosch. 

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.

For an unbiased review of condensing boilers have a look at this article in WHICH magazine.


Having purchased a new boiler landlord can then insure themselves against further maintenance costs by taking out boiler insurance.

Property Hawk 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 cashflow 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!

LANDLORDS remember for insightful comment, news, views and practical guidance sign up to Property Hawk and receive your FREE weekly e-mail covering the world of UK residential property investment.

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