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Ferdinand

EPC helped by loft conversion?

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Posted (edited)

I am hoping someone has done this,

 

I am currently looking at doing a loft conversion in a rented property.

 

One aspect is that I am likely to need an EPC grade of C by 2030 to be able to let it legally at that point. I have done most of the low hanging fruit already .. 50mm celotex  IWI where needed, 250mm loft ins., 2G and so on. there is a boiler swap to condensing and HR to be done at some stage, but the EPC is currently D58, which is quite poor given that energy bills only run at -60 per month, and I do not think that a boiler alone will give me 12 more points.

 

So I need to take some care.

 

If I do a well insulated loft conversion .. say to add 25sqm to the loft area in addition to the existing 85sqm area, does the per area algorithm for an EPC mean that in practise I get a nice boost for the extra area with only a marginal increase in energy use?

 

(I am in a position to do a cost-effective conversion for various reasons.)

 

Cheers

 

Fedinand

Edited by Ferdinand

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I didn't know it has to be a C by 2030.  I suppose there will be exemptions if the improvements would cost too much.

 

New boiler and controls will make quite a big difference to the score.

 

If the increased rent return covers the conversion of the loft it is probably worth doing.

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Posted (edited)
14 hours ago, Mr Punter said:

I didn't know it has to be a C by 2030.  I suppose there will be exemptions if the improvements would cost too much.

 

New boiler and controls will make quite a big difference to the score.

 

If the increased rent return covers the conversion of the loft it is probably worth doing.

 

Looking at the EPC, boiler is +3, heating controls are +1, flue gas HR is +1. Presumably shower HR device is also +1-2. So I need about 10 more points. 

 

The intention has been in law since the Energy Act 2011 ,but it will be in regulations so there is still scope for variation.

 

"Proposals for improving the energy efficiency of domestic properties also include a legal obligation requiring the government to take action to raise the EPC ratings of as many fuel poor homes "as reasonably practicable". EPC ratings should reach Band E by 2020, Band D by 2025 and Band C by 2030, according to the consultation. "

https://www.out-law.com/en/articles/2014/july/uk-government-sets-out-long-awaited-energy-efficiency-standards-for-new-property-rentals/

 

There are exceptions (eg listed, or LL who can prove it is not viable within a 7 year payback), but the system for registering an exception is complex and the register is public.

 

Given that EPCs are a political document that changes every few years, the draconian nature of the punishments, and unpredictability of the process and the environment, that any changes will be reprospective, and other factors, my stance is that I renovate to a high-C or a B, or at least know how I can get there, and charge some % more rent to cover it; I work on me getting 50% my estimate of the tenant's savings on the bills.

 

We need the same system for Owner Occupiers, enforced at sale time.


Ferdinand

 

Edited by Ferdinand
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This whole EPC thing puzzles me.  Most people will not now buy a fridge unless it has an A++ rating, yet are happy to buy their largest ever purchase with an EPC of F and then complain about the fuel bills.

 

Logic would say that poorer rated houses that are going to cost more to run and cost money to upgrade should have a lower market value, but that does not seem to be the case.  Perhaps the really poor ones that cannot be let now will be worth less?  I suspect most landlords have simply been selling poor ones rather than upgrading.

 

And charging more rent?  so are you saying if it costs £7K (number picked to make the sums easy) to upgrade a property, the landlord is justified in charging £1K more p.a. in rent so he will get payback of his improvements in 7 years?  Will he find he is able to rent it or will it sit empty because it is above the "market rent" for the size of property?  i.e. are tenants astute enough to pay more for a property that will cost them less to heat and be more comfortable?

 

As a landlord (now reluctantly) I see none of this in tenant behaviour.

 

I am pretty sure if buying a property now, I would not even consider anything lower than an EPC C unless it was spectacular in some other way (in which case it would be a renovation project and would have to be priced as such).  I also suspect I would be in the minority having requriements like that.

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I think that younger people are so pleased to find somewhere that they can afford to buy, or rent, that they don't care what the EPC says. Rich people don't seem to give a toss either. I think the idea of the EPC is a good one, but i just don't work.

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Posted (edited)
22 hours ago, ProDave said:

This whole EPC thing puzzles me.  Most people will not now buy a fridge unless it has an A++ rating, yet are happy to buy their largest ever purchase with an EPC of F and then complain about the fuel bills.

 

Logic would say that poorer rated houses that are going to cost more to run and cost money to upgrade should have a lower market value, but that does not seem to be the case.  Perhaps the really poor ones that cannot be let now will be worth less?  I suspect most landlords have simply been selling poor ones rather than upgrading.

 

And charging more rent?  so are you saying if it costs £7K (number picked to make the sums easy) to upgrade a property, the landlord is justified in charging £1K more p.a. in rent so he will get payback of his improvements in 7 years?  Will he find he is able to rent it or will it sit empty because it is above the "market rent" for the size of property?  i.e. are tenants astute enough to pay more for a property that will cost them less to heat and be more comfortable?

 

As a landlord (now reluctantly) I see none of this in tenant behaviour.

 

I am pretty sure if buying a property now, I would not even consider anything lower than an EPC C unless it was spectacular in some other way (in which case it would be a renovation project and would have to be priced as such).  I also suspect I would be in the minority having requriements like that.

 

Tenants can be educated. More generally they tend to hit themselves with a cluebat after they have once moved from a property running at £60 per month bills, to a seemingly identical property with a £25 a month lower rent costing £150 a month to run.

 

But such culture will take a looooong time to develop.

 

As ever, if you can buy a restorable E, spend £x on it, and by upgrading to a C gain £2x value on it in capital or the NPV of increased rent over your relevant timeframe, then it is potentially worth doing from a business POV.

 

If people can restore things at half the cost of doing it as a layperson employing Trades, that opens up opportunities.

 

In-tenancy projects are more interesting, but Eg I can count them against the 500-2500 I would need to spend for every tenant change. That is one aspect of this loft conversion, plus it also justifies the project in value terms ... just.

 

I agree there in insufficient knowledge in the market. But the flip side of that is opportunities.

 

Cheers

 

Ferdinand

Edited by Ferdinand

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Posted (edited)

Just off the phone to my EPC man, who runs Energy Performance Consultants of Ripley, and his initial opinion is that one would also need to achieve a good reduction in CO2 output in addition to an increase in floor area to make a significant difference.

 

Which raises the spectre of replacement of the boiler with an ASHP as one thing that may be worth a look.

 

 He was very emphatic on the need to analyse and model any changes first because the calculation is unpredictable.

 

Ferdinand

 

Edited by Ferdinand

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When i needed an EPC on my daughter house, when i was doing a large extention. I phoned an old developer pal to see if he could give me a clue who to use. He said use my bloke, and gave me his number. The guy asked me what result i wanted. Said that very few people would have a clue what the data ment ! Told him what rating i wanted, and he sent it in the post.... Airtest man on the last new build i did for a client. Turned up and asked me what result i wanted !!!! said that they can fiddle the software to get whatever result i wanted. I think to be convinced, i would want to see actual running cost bills. My cousin was involved in writing the software that is used all around the world for National Lotteries. I asked him if they had put in any back doors to enable a winning ticket to be produced after the draw. He said they had, and that it would take 4 people to be logged in as the draw takes place to enable a winning ticket to be produced.. Show me a Gas, and an electric bill any day.

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12 hours ago, ProDave said:

I am pretty sure if buying a property now, I would not even consider anything lower than an EPC C unless it was spectacular in some other way (in which case it would be a renovation project and would have to be priced as such).  I also suspect I would be in the minority having requriements like that.

this is a question i ask students, there are two identical houses on an estate, one has been done up with ewi, modern boiler and triple glazing and has a good epc rating but is on the busy main drag through the estate and backs onto a kids play park. the other has a 7yr old boiler, double glazing and no cavity insulation so has a poor epc, it is situated in a quiet cul-de-sac with a generous garden which backs onto fields. there is very little difference in price, which would you buy?

the majority would buy the poorer epc house due to location.

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2 minutes ago, Simplysimon said:

this is a question i ask students, there are two identical houses on an estate, one has been done up with ewi, modern boiler and triple glazing and has a good epc rating but is on the busy main drag through the estate and backs onto a kids play park. the other has a 7yr old boiler, double glazing and no cavity insulation so has a poor epc, it is situated in a quiet cul-de-sac with a generous garden which backs onto fields. there is very little difference in price, which would you buy?

the majority would buy the poorer epc house due to location.

Definitely the poor house. It can be upgraded (as proved by the other one) but you can never move a house off the busy main road.

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Posted (edited)

 

8 hours ago, Simplysimon said:

this is a question i ask students, there are two identical houses on an estate, one has been done up with ewi, modern boiler and triple glazing and has a good epc rating but is on the busy main drag through the estate and backs onto a kids play park. the other has a 7yr old boiler, double glazing and no cavity insulation so has a poor epc, it is situated in a quiet cul-de-sac with a generous garden which backs onto fields. there is very little difference in price, which would you buy?

the majority would buy the poorer epc house due to location.

 

For many people, the kid's play park would be a plus for kids, and also for active streets / security. OTOH it would depend what the other backed onto.

 

I would probably go for the doer-upper, in the knowledge that I would then know what had been done.

 

For the other, but I would be demanding about the restoration. Wearing my LL hat, I have been offered houses with restorations where the fabric was not done underneath, so they would have to be gutted before meeting expected EPC standards (though as mentioned there will be exceptions).

 

Cavity and loft insulation are usually free or nearly free, and (depending on status) so is a new boiler sometimes.

 

F

Edited by Ferdinand

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