As part of his election campaign, president Donald Trump promised to cut energy prices by half. In reality, February figures show electricity prices have risen by about 6.7% and natural gas prices have increased by 10.8% as the government continues to prioritize fossil fuel producers over consumers.
Even if steps are taken to relieve this financial burden, there’s no guarantee energy costs will come down. They’re primarily influenced by factors beyond the government’s control, including weather-driven demand and wider market conditions.
Taking steps to make your portfolio more energy efficient is the only way to be sure of paying less on energy. Leaning into sustainability can also add value, help you stay compliant with changing regulations and make your properties more attractive to prospective tenants, now and in the future.
The Growing Risk for Property Owners
High energy costs mean multiple risks for landlords and property managers. Profitability can be severely impacted for bills-included rentals as rent rises fail to keep pace with increasing energy costs. When rent is raised to cover costs, there’s a greater chance of increased rent arrears or void period charges.
Where tenants are responsible for energy bills, they may turn off heating to save, increasing the likelihood of potentially invasive problems like damp requiring expensive maintenance. Construction tender prices rise in line with energy prices because they influence the cost of materials like cement and steel and site operations, so you may face higher quotes from contractors to boot.
The risk also extends to regulatory changes. State governments across the country are setting stricter buildings standards with a view to combating climate change and are likely to demand higher standards of energy efficiency in properties in the near future. Failing to meet these could lead to expensive fines and retrofits, and tenants withholding rent or suing for damages.
Finally, ignoring increasing consumer demand for sustainable living risks rental properties losing market value and appeal. Setting up your homes so heating and devices perform better for less stands you in good stead for the future.
How to Future-Proof Your Buildings
1. Reducing heat loss
The building fabric—the walls, roof, windows and floors—plays a key role in energy efficiency. Poor quality materials or poor construction will allow heat to escape and cold to come in, forcing tenants to use more energy to stay warm.
Older properties that haven’t been upgraded recently are likely leaking energy. Enhancing even just a few of these key areas could save you significant sums.
Start by assessing the insulation, as this is the main barrier to heat loss in a home. Top up or replace existing insulation in the exterior walls and attics and consider adding fibreglass insulation for thermal and acoustic regulation in lofts and stud walls and between floor joists.
Most heat is lost around windows and doors, so ensure these are well-sealed and update outdated or single-glazed windows with double-glazed or even triple-glazed alternatives in uPVC frames.
2. Upgrading existing systems
Heating, ventilation and air conditioning (HVAC) systems use a lot of energy. Even if existing systems are still reliable, consider upgrading them to modern models which perform as well or better using less energy.
Renewable heating systems such as air source or ground source heat pumps and solar-powered systems may involve more investment than simply replacing traditional gas or electric boilers, but they’ll ensure your properties are effectively future-proofed in the face of changing regulations around residential heating.
Beyond HVAC, consider upgrading lighting and appliances to further reduce energy use. Switching to LED bulbs gives you the same brightness for less power. Choosing ENERGY STAR-rated appliances that meet the criteria set by the U.S.
Environmental Protection Agency (EPA) or the Department of Energy will help ensure lasting compliance while minimizing bills. Opting for new products also reduces the likelihood of expensive repairs.
3. Meeting regulatory changes
Local, state, and federal governments are increasingly mandating stricter building codes, especially for rental properties. When considering how to make your properties more energy efficient, go above and beyond the latest regulations to help ensure they remain compliant into the future.
Many US municipalities offer incentives or tax breaks for property owners who invest in energy-efficient upgrades, so staying proactive could also present financial benefits, as well as solidifying building value for consistent returns.