Energy efficiency in the home - important tips for property investors

27-Oct-2016

Over 40% of the energy Australians use at home is for heating and cooling; and that’s not including the energy used to create hot water!

With summer just around the corner, many tenants will be increasing their energy consumption for cooling their homes.

The cost involved in using energy within the home (and the opportunity to save money) is a key driver for tenants becoming more conscious of the amount of energy they use. The fact that it is also good for the environment is another motivator. Walk into any white goods retail store and you will see that all white goods today have stickers displaying their energy rating. The higher the energy rating, the greater the incentive to purchase for energy conscious consumers. It won’t be long before it becomes routine to look at the overall energy rating of a house.

Things like solar power and insulation are important factors in making a property energy efficient. Homeowners are increasingly factoring in these items when considering the attractiveness of a particular property. As a property investor you should consider the fact that your prospective tenants are also looking for an energy efficient home to lower their energy bills.

If your home is not energy efficient, then you will be committing your tenants to higher ongoing costs, which can affect the desirability of your investment property to lease.

So what can you do to improve the energy efficiency of your tenanted property?

  • Seek opportunities to maximise natural light: Good natural light reduces the need for use of electrical lighting during daylight hours (consider this opportunity with any maintenance or renovations you undertake. Window dressings – both interior and exterior - and even the colour painted on the walls can have an effect on natural light indoors).
  • Air conditioning: Air conditioning is a desirable feature for tenants. Just ensure you have energy efficient air conditioning units installed. Ceiling insulation will also improve the efficiency of interior climate control, and in this way minimise energy consumption.
  • Solar panels for energy efficient water heating.

How do you benefit from investing in energy efficient features for your investment property?

  • There are Government rebates and tax incentives available to improve the energy efficiency of your property.
  • It can be a selling point in the future when you decide to sell your investment property.
  • It assists with the attraction and retention of tenants.
  • Environmental benefits.

As a landlord you may think your tenants are the key beneficiaries of the financial savings generated from making the property more energy efficient and that it delivers a slow return on investment for you. But long-term benefits are worth considering and an energy efficient property in a marketplace of tenants that are conscious of energy efficiency may allow you to gain a higher rental return.