Landlords need to spend up to €8bn to retrofit properties to B energy rating

By Cate McCurry, PA

The total investment required by property owners to retrofit the rental sector to a B energy rating is estimated to cost between €7 billion and €8 billion, according to new research.

The Economic and Social Research Institute (ESRI) released a new report on the current energy efficiency status of buildings in the private rental sector in Ireland and the scale of the investment needed by property owners to lower carbon emissions.

The report, funded by the Department of Housing, pointed to a need for external financing, through loans, if the investment is to be made.

The National Residential Retrofit Plan aims to improve the energy efficiency of homes, including private rental properties, by achieving a BER (Building Energy Rating) rating of B2 or the most cost-optimal level.

As a starting point to meeting these targets, a detailed and thorough understanding of the current energy efficiency levels in the sector is needed, the ESRI said.

The research also examines the investment needed for upgrades and evaluates the financial ability of different stakeholders in the private rental housing sector to cover such costs.

It found that out of the 240,000 to 260,000 rented properties with BER below B2, the majority are either rated D (30 per cent) or C (52 per cent).

The remaining, approximately 45,000 rented properties, have an energy efficiency rating of E1 or below.

The costs of upgrading to a B-rating vary substantially but are estimated to be 43,000 euros on average for G-rated properties and just under 30,000 euros for C-rated properties using 2023 prices.

These estimates are based on the data of about 1,500 upgrades in social housing, Approved Housing Bodies, and the private sector.

The total investment required by property owners to retrofit the rental sector to BER of B1-B2 is estimated to be between €7 billion and €8 billion.

Meanwhile, retrofitting only the lowest efficiency rentals with current BER of E1 or below is between €1.7 billion and €2.3 billion.

The report also looks at the financial capacity of the households that are landlords in the private housing rental sector.

The assessment points to a financial challenge for many household landlords in financing upgrades if they want to do so.

Dr Janez Kren, co-author of the report, said: “The residential rental sector in Ireland is expected to undertake investments to lower carbon emissions in the coming years.

“This research attempts to quantify the scale of this challenge and provide an evidence base to inform policymaking in this area.”

Dr Conor O’Toole, co-author of the report, said: “Our research considers not only the scale of investment required to increase energy efficiency in the rental sector but also considers how such investments can be financed, in particular by household landlords.

“This analysis points to a need for external financing, through loans or otherwise, if these investments are to be realised.”