Landlords warned against costly EPC upgrades

Landlords are being warned not to rush into installing heat pumps as a solution to improve their rental properties’ Energy Performance Certificates (EPCs).

While the government strongly promotes heat pump adoption, analysis reveals that these systems may not always translate to higher EPC ratings and could significantly increase running costs.

The data from the energy efficiency platform epIMS shows that air source heat pumps dominate the market, boasting higher efficiency than traditional gas boilers.

However, despite their efficiency, heat pumps tend to use more expensive electricity, leading to higher operational costs compared to gas.

That means the estimated annual bill for heating and hot water when using a ground source heat pump is £806 – just £9 cheaper than a traditional gas boiler.

Heating a home with an air source heat pump will cost £1,001 a year, on average.

‘Currently don’t improve most EPC ratings’

The firm’s Craig Cooper said: “Whilst an air source heat pump is more environmentally friendly than an efficient gas boiler and in the right circumstances can be less expensive to run, they currently don’t improve most EPC ratings.

“As a consequence, landlords need to look carefully at what improvement measures contribute towards a C rating, which is widely expected to become mandatory by 2030.”

He added: “The good news is that there is a raft of smaller, more cost-effective changes that can be made to a property which are likely to boost an EPC rating, such as installing PV panels over internal or external wall insulation.”

Surge in heat pump installations

Official data reveals a big surge in heat pump installations with more than 113,555 government-supported installations in the past five years, driven by policy initiatives.

In the second quarter of this year, installations reached 9,871, a substantial increase from 2,461 in the same period of 2019, and a 41% jump compared to the previous year.

Air source heat pumps remain the most prevalent type, accounting for 99% of installations.

This push stems from the higher efficiency of heat pumps compared to traditional gas boilers.

Heat pumps may be the most cost-effective

The EPC platform says that a typical gas boiler operates at 85% efficiency and consumes 11,212 kWh annually.

In contrast, ground source heat pumps boast 400% efficiency and consume 2,383 kWh, while air source heat pumps achieve 300% efficiency with 3,177 kWh consumption.

However, despite their efficiency, heat pumps may not always be the most cost-effective option due to the higher cost of electricity compared to gas.

Electricity prices currently stand at £0.2450 per kWh, significantly higher than gas at £0.0624 per kWh.

Also, electricity standing charges (£0.6099 per day) are also higher than those for gas (£0.3166 per day).

Questions whether heat pumps can help landlords

The firm questions whether heat pumps can effectively help landlords achieve the potentially mandated EPC C rating by 2030 – considering the installation and operation costs.

The answer, epIMS says, is not straightforward since EPC ratings are not solely determined by efficiency but also by the cost of heating and powering the property.

Historically, cheaper energy sources like gas have favoured higher EPC ratings.

While the recent energy price cap has narrowed the gap between electricity and gas prices, heat pumps may still not always be the best choice for improving EPC scores for landlords.

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