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Tenants in properties with low efficiency ratings are overpaying for energy by as much as £13m every month, according to new research by AXA Direct.

According to UK law, all domestic and commercial buildings must have a valid Energy Performance Certificate (EPC). These provide an energy efficiency rating from A to G, giving potential buyers or renters a clear idea of how expensive a building will be to heat and light. 

In a recent study, AXA Direct found that one in 20 rental properties fall into categories F and G. This means that over 200,000 homes could be banned from the private rental market next April, when new minimum energy standards will come into force.

‘Just how much these failing homes are costing tenants was revealed by analysis of their monthly bills,’ said AXA. ‘The average monthly bill in a Band A rental is £61 per month, increasing to £76 in Band E, and then £112 in Bands F to G. This means that UK tenants are still paying for energy failings to the tune of an estimated £13 million every month.’

Despite this, the news overall is mostly positive. AXA emphasised the fact that the number of F and G properties has halved since 2015. Over half of the properties surveyed were also found to be in bands A to C.

Even in older homes, minor improvements such as loft insulation, double glazing or even hanging thicker curtains can lead to major reductions in energy bills.

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“Our study has found that landlords are making significant investments into improving the energy efficiency of their properties,” said Gareth Howell, Managing Director at AXA Direct. “And this is part of a bigger trend: when we look at our surveys of tenants and landlords over the past five years, we see progress across the board – on security, maintenance and numbers with proper tenancy agreements in place.“

He claimed that despite the “pockets of failure” in the market, “95 per cent of landlords” are “trying to do the right thing.”

Homes in Scotland proved to be the most energy efficient in the UK: 83% of Scottish properties surveyed had double glazing, while 76% had roof insulation and 73% were equipped with modern boilers. Wood burning stoves were also present in 15% of surveyed homes, double the average of anywhere else in the UK.

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From a tenant’s perspective, it is always worth checking a property’s EPC before signing a rental agreement. A substandard EPC rating can often be used to negotiate a reduction in rent or even alterations to a property prior to moving in.

Even in older homes, minor improvements such as loft insulation, double glazing or even hanging thicker curtains can lead to major reductions in energy bills. An EPC, which will remain valid for ten years, will also provide advice on how a property’s energy rating can be increased. 

‘AXA advises landlords running properties in the worst-rated bands to consider upgrading their properties as a matter of urgency,’ the company continued. ‘While those in Bands F and G will be forced from the market next year, those in Band E may well join them over the coming years following last week’s recommendations to Government by Frontier Economics.  Help is on offer to landlords under schemes like the Green Deal, while tenants on low incomes can access support from the Affordable Warmth Obligation.’