0:05 AM, 4th August 2023, About A year ago 27
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We’ve all been hearing about the government’s green plan for the private rented sector. But are the plans actually as ‘green’ as they make out to be?
The government believe heat pumps could be the answer to help tackle the energy-efficiency problem in PRS homes.
This Property118 investigation looks at all the details to do with heat pumps and finds out whether they are as energy efficient as they claim to be.
There are different kinds of heat pumps but most use the same basic principle of heat transfer. Rather than burning fuel to create heat, the pump moves heat from one place to another.
During winter, the heat pump will absorb heat from the outside and release it inside. In the summer the pump does the opposite by moving heat from the air inside to outside.
While this sounds all good in principle there’s a lot more than meets the eye.
Installing a heat pump isn’t cheap. An air source heat pump can cost between £7,000 and £15,000 to buy and install.
Ground source heat pumps can cost between £15,000 and £35,000. The government launched a boiler upgrade scheme last year offering a £5,000 incentive to install a heat pump.
It’s worth remembering that the grant only covers the cost of the pump and not the installation.
According to a programme by the BBC, the government initially planned to issue 30,000 grants annually in England and Wales but only managed 12,000 in its first year.
When asked about the high costs of heat pumps in the programme, the Minister for Energy Security Graham Stuart said: “The price of heat pumps is coming down and we think that heat pumps with a rebalanced pricing system across the energy sector will become more and more competitive going forward.”
However, the government completely missed their target to install 600,000 pumps a year in 2022 with only 43,000 installed.
The BBC says at current rates of installation, it will take more than 400 years before every British home has a heat pump.
Even if some people can afford to pay, there is another barrier to hitting the government’s heat pump targets. The UK only has 4,000 trained heat-pump installers – it is estimated we will need 33,000 by 2028.
Rodney Townson from landlord association iHowz, says that the organisation have never shared the government’s ambition for heat pumps as a solution for lower carbon heating in the PRS.
“Tenants want safe homes which are affordable to heat and do not want technical heating solutions which can end up costing significantly more than existing gas central heating.
“In order for heat pumps to deliver efficiency of up to 300% they require a well-insulated property which is likely to require some form of mechanical ventilation with heat recovery to ensure sufficient air flow.”
Heat pumps are not suitable for many older properties without huge insulation upgrades, eg external cladding.
Though the plans have not yet become law, ministers have previously proposed that by April 2025, newly rented properties in England and Wales will need to meet a minimum EPC standard of C – tougher than the current E standard.
The regulation is also slated to apply to existing tenancies from 2028.
Having a heat pump installed on the property doesn’t automatically guarantee an EPC C rating.
Heat pumps use more electricity compared to natural gas and the way EPC’s are designed at the moment they take into account grading based on bills rather than carbon output.
However, a consultation on new EPC and minimum energy efficiency standards (MEES) requirements ended two years ago.
The government has given no response to it, leading to widespread uncertainty in the PRS about what is expected from landlords. Mr Townson has been writing to ministers since 2021 urging them to publish the new EPC and MEES requirements for the PRS.
He said: “As the UK transitions to a lower carbon emission approach to heating homes landlords need more support from the government.
“Landlords and other homeowners require greater clarity on what the new EPC/MEES standards will require, which is supported by a long-term scheme with adequate resources – installers, materials, funding and assessors.”
Landlords up and down the country are already struggling with rising costs and many are spending thousands of pounds upgrading their properties due to the government’s green energy push.
Mick Roberts, a landlord from Nottingham, previously told Property118: “Many landlords have spent thousands of pounds upgrading homes and we don’t even know what’s what yet due to the uncertainty around the new EPC targets.”
He said a lot of properties may need £30,000 spending on them just to get to band C.
“I’ve got to start telling tenants soon, ‘You can’t live here past 2028, the government say you can’t if the property is not a C, and your rent doesn’t pay for a C’.”
Tom Spurrier, of the UK Green Building Council, told the Telegraph: “We have currently got a metric that incentivises gas because it is cheaper.
“If you install a heat pump, which is powered by electricity, your EPC rating may fall.”
Scottish Green Minister Patrick Harvie revealed plans for homes to receive a lower environmental rating if gas boilers provide the heating.
Landlords and homeowners in Scotland will need to meet an EPC rating of C or above from 2025 – with the rules preventing the sale of some properties that have boilers.
Lord Willie Haughey, a businessman who owns a heat pump supplier company, said heat pumps may not be the answer due to Scotland’s harsh climate.
He told the Telegraph: “The truth of the matter is that heat pumps don’t work as efficiently in Scotland as they do in other countries.”
Lord Haughey also warns that heat pumps are noisy and will only heat water to 54C (129.2F) – that’s lower than the 60C recommended by the Health and Safety Executive to kill the legionella bacteria.
Could these plans be coming to England anytime soon and will landlords be expected to install heat pumps instead?
The government previously stated that it aims to ban the installation of all new gas boilers in England by 2035 in rented and owner-occupied properties.
Comments made by Michael Gove on Times Radio last week signal the government may be backtracking on the proposal.
He said: “There are proposals to decarbonise our existing housing stock, which I think are the right direction to go.
“But the costs which some of those changes may impose on homeowners and landlords, I think that at this point in time, we do need to be careful about”.
Compared to installing a heat pump an installation of a fossil fuel boiler tends to cost around £2,500. Another issue is that heat pumps don’t work well in poorly insulated homes.
Homes need to be well insulated for heat pumps to be effective because the devices work at lower temperatures and so will struggle to get the house warm and keep it to temperature.
Mr Townson says that the government has not done enough on insulating Britain’s homes.
“Last winter the government spent almost £4bn a month to subsidise energy bills, yet no significant new funding has been made available to accelerate the insulation of Britain’s homes over the summer months.
“Clearly, the PM and the chancellor have forgotten George Osborne’s prompt to fix properties while the sun is shining.”
Mr Townson says the other problem is that the PRS is made up of older housing stock and many HMOs or leasehold flats have planning restrictions which make it impossible for heat pumps to be fitted.
“Many rental properties are HMOs or leasehold flats. There may be planning or lease restrictions which prevent or add additional administrative and direct costs, which prevent or make it unaffordable to fit heat pumps for these properties.
“The PRS has a high proportion of older housing stock, hence landlords’ concerns at the lack of any government announcement on the new EPC standards, beyond Mr Gove’s recent indication that it has been kicked into the long grass and will not be addressed this side of a general election.”
He says that councils need to relax planning restrictions along with fees for any insulation measures. It’s no wonder that landlords and homeowners are looking for cheaper options rather than installing a heat pump.
Mr Townson says that insulation is the most sensible solution.
“The best and most sensible solution to energy saving in the housing sector is Fabric First, which is draft proofing and insulation.
“This is a sensible solution as it reduces the need for energy to heat (and cool) homes and the solutions are independent of the specific energy source (mains electricity / solar / hydrogen).
It remains to be seen whether the government will backtrack on its green energy push for the PRS.
We all want our homes to be as energy-efficient as possible but with the costs involved, heat pumps might not be the answer to the solution.
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Peter Sproston
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Sign Up18:33 PM, 6th August 2023, About A year ago
Reply to the comment left by Adrian Ellis at 06/08/2023 - 10:35Hilarious!
Last I heard we don't have permafrost in the UK so freezing up GSHP wells is absolute nonsense, particularly at 83m deep!
Maybe just something you might have read?
John Grefe
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Sign Up10:39 AM, 7th August 2023, About A year ago
Reply to Ade T; 1. Gambling with investment? It's the future of our planet & children we are playing with therefore better.2. More expensive than gas? Yes, but with solar panels & batteries, no. 3. Scotland, like a fridge in Summer? Maybe, but so are Denmark, Sweden & Finland (etc). But, they have them without gas!
Reply to Adrian Ellis; GSHP, ground could freeze like a block of ice. Yes, but the piping is at least 1.5M below and below the frost level. This is typical mis-information - we had it when we were first installing our four GSHPs.
Reply to Mick Roberts ; It's similar to any company, e.g. builders, recommendation, word of mouth, work evident. John
John Grefe
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Sign Up10:47 AM, 7th August 2023, About A year ago
Reply to the comment left by Beaver at 05/08/2023 - 17:51
Hi Beaver. No I didn't insulate the walls. What I did was to lower the 2.8M+ ceilings by 300mm and added 100mm insulation. John
Beaver
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Sign Up11:12 AM, 7th August 2023, About A year ago
Reply to the comment left by John Grefe at 07/08/2023 - 10:47
So with no insulation in the walls but with extra insulation in the ceilings, what EPC rating did you finally end up with?
So simple
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Sign Up12:25 PM, 7th August 2023, About A year ago
John G, I said gambling with the investment because the rules that we are being asked to follow are going to change completely when a new Carbon Based EPC system is introduced, and the cost based EPC is withdrawn.
I have not said anywhere that we shouldn't be making houses more energy efficient, and less carbon reliant.
I was pointing out that there is a big cost impact here on someone, either Landlord or Tenant, or both and at the present time we don't know who because the government only says that the rules of the EPC will be changing.
On the basis that you acknowledge the fact that the ASHP only really works cost efficiently with ASHP + Solar + Batteries then we are looking at a capital cost in excess of £35,000 per house at the moment. And we still don't know exactly what EPC result that will achieve.
If we don't know what EPC it will achieve (under a new EPC system) then we clearly don't know if we'll be legally allowed to rent the property out.
That strikes me as a total gamble of £35k at the present time.
Personally, as a landlord with 22 houses I know that is causing nervousness in the market.
22 x £35k = £770,000. I see many LL selling.
I actually say in my previous post (that you refer to) that we just need to know the rules asap and there has to be significant financial support from the government if landlords are to be expected to pay that sort of money out.
I stand by my comments that this needs addressing urgently so that LL can understand whats being asked of them and then they can make a balanced decision based on the NEW rules of play..
I also stand by my comments that unless this government sorts this out fast, and supports LL with the enormous costs then more LL will sell.
Who do you think should pay for that £35,000 per property Mr Grefe?
I don't have £770,000, but I do own 22 very well maintained homes over half of which are currently EPC C now, but probably won't be under a new EPC system which hits GCH hard.
£35k on a small cottage in Bradford worth £100k is not a great equation.
Who will loose out if LL are not supported in this?
TENANTS.
I know and agree there needs to be a move from carbon, but the action of this goverment so far have created a housing crisis the likes of have never been seen before. If the only answer is that LL have to pay for decarbonising the PRS when the rest of the country can do what they want then LL will sell.
I wonder if anyone has asked the tenants what they want. I suspect availability of housing at decent rents will be top of the list. They are getting neither at the moment.
PH
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Sign Up12:37 PM, 7th August 2023, About A year ago
I just want dates when all these super duper new rules will be enforced so that I can plan my exit strategy. I won't be spending a penny as it'll take years to get back and I'm too close to retirement so my lovely tenant will unfortunately have to be re-housed. There you go UK government deal with it.
Beaver
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Sign Up14:09 PM, 7th August 2023, About A year ago
Reply to the comment left by Ade T at 07/08/2023 - 12:25
I think that's right. There's a shortage of rental property. If instead of investing your £35K on one of your existing houses you had £35K invested in a £100K BTL flat somewhere with a 60% LTV mortgage you'd actually be putting an extra roof over somebody else's head.
Not many tenants are going to benefit from being prevented from having a gas-fired boiler. Gas is cheaper than electricity. All that's going to happen unless the tax system changes is that their rents are going to go up higher than would otherwise be the case.