Dramatic progress has been made in the construction of new homes in the last decade when it comes to energy efficiency and the use of sustainable building materials for construction. While there is still a lot of room for improvement, between updated building code requirements, consumer awareness, and just plain common sense the use of energy efficient windows, insulation, and modern more efficient heating and cooling systems is a primary consideration in building construction.
In addition to the improvements in new construction, home improvements in existing structures have become far more eco-friendly. Modern energy efficient heating and cooling systems, the addition of insulation, updating windows, doors, and siding are among the most popular and common improvements. The addition of solar panels and solar hot water heaters, wind turbines, and geothermal heating and energy sources is becoming common place for even greater contribution to the reduction of reliance on fossil fuels.
While there is a lot of room for improvement in all these areas, environmentally friendly is now a primary consideration for many as opposed to the afterthought it was for years. Spurred by education and the economic realities that have proven time and again it is cheaper to go with energy efficient and that eco-friendly is sound investment, progress has been made and the pace of change has accelerated in many sectors.
There is however one very large sector that has been left behind in this era of change. While homeowners have embraced change and are now reaping the benefits, renters usually forgotten completely. With 35 million properties in the United States designated as rental properties, and the number of renters compared to homeowners increasing substantially since the peak of home ownership in 2004, this segment is becoming a bigger problem and one that really needs to be addressed.
What is the Difference in Home Ownership to the Environment?
Why do the green improvements drop so significantly in the rental sector compared to homeowners? Like most things the root of the issue comes to money. While homeowners see home improvements like energy efficient windows, insulation, and heating and cooling as an investment, most landlords see it as an expense. It is difficult to raise the rent enough to cover the cost of major capital improvements without facing vacancy issues. Even though the improvements might reduce the cost of utilities for the tenants, getting by the hurdle of higher rent is still a tall task.
Even greater hurdle to the landlord, even if they wanted to do the improvements, the subsidies and tax breaks enjoyed by homeowners are often not available to use on rental units. As a homeowner you could expect some substantial tax credits for making energy saving changes or adding solar energy to a home, but these programs nearly all apply exclusively to owner occupied single unit housing. There is often a 30% to 40% offset in costs to the homeowner in savings which renters would be paying 100% of the cost for the same improvement.
In addition to the fact that recouping the cost of these improvements is greatly extended due to the lack of subsidies, the savings in utilities typically go to the renter as opposed to the landlord. This means to the energy saving improvements is truly just an expense and the only hope of recovering the investment is in higher rents that are difficult to get in many market or in eventual resale many years down the road. Until the government programs that help make these improvements apply more universally, 35 million properties- over a third of the housing in the US will continue to be left behind.
Some countries have found ways to make these type of improvements available to tenants and landlords. One example of a progressive program for this is found in the UK. The Green Deal initiative, unlike most US tax incentive program not only does not exclude rental properties but includes incentives to both the property owner and the tenant to make these improvements. One example of this is when the loan covering the cost of the improvements is actually paid as part of the electric bill by the tenant. The key to making it work is the cost of the loan payment is equal to or less than the energy savings provided by the improvement.
Using this type of progressive approach affords the tenants modern energy efficient updated housing while protecting the both the property owner and the tenant from substantially higher cost. To solve the 35 million problems the US has in making energy efficient eco-friendly housing available, we will need to structure future programs in similar way.
