Closing the Investment Gap Between Renters and Landlords

By Bethany Alender, 1st year MES student.

I recently attended a community symposium on Healthy Energy Improvements for Rental Homes, which is part of The Vision2Action Sustainability Series – A Conversation on the Built Environment.  This symposium brought together landlords, renters, real estate agents, construction and energy experts, health experts, public agency representatives, and many other community leaders.

The purpose of this symposium was to address the problem of a split incentive created by the divide between renters and landlords on investment return.  More and more people are renting than owning homes, but rental properties are often not well insulated or equipped with energy efficient appliances.  This happens because renters usually pay for power and gas, so the landlords do not benefit by investing in energy efficiency; and renters do not want to make the improvements themselves because they are not likely to see a return on investment before they move.  The poor insulation and low maintenance of many rental homes can also lead to poor indoor air quality.  One woman spoke at the symposium about her family’s experience with illness directly caused by mold in her apartment.  The landlord had decided to save a buck and paint over the mold instead of removing it before her family moved in and her daughter suffered dozens of ear infections and pneumonia before the age of 3.

According to the keynote speaker, MES alumnus Steve Abercrombie, 150,000 people will come to Thurston County by 2040.  That’s a lot of housing!  He sees opportunity for improvements in energy efficiency in the middle market; the high end is already incentivized and the low end is subsidized.  However, when low income families have to make a choice between rent, utilities, and food, they are going to choose food and utilities first. If the utility is unexpectedly high, they’ll be late on rent.  This is one reason for landlords to invest in energy efficiency.  Another reason for landlords to invest is that renters are demanding more energy efficiency.  Renters are likely to stay longer if their home is affordable to live in.  Some real estate agents present at the event agreed that they much prefer a tenant who stays for a longer period.

Abercrombie presented a vision of an online marketplace that would act like Angie’s List for housing. “Homeprint evaluations” would report the home’s average energy costs based on the last tenant’s bills.  These would allow renters to asses the health and costs of the home, and the investment by the landlords would be recognized.

Example of a "home print evaluation."

Example of a “home print evaluation.”

Some advice from the panelists:
A real estate agent offered a bit of advice to those looking for a new home to buy or rent: Avoid homes built by national construction – local builders are the way to go. Local builders know the right type of construction needed for the land and the climate, and they are concerned with their own reputation. An energy expert advised tenants to be cautious of “offsetting behavior.” Offsetting behavior occurs when the potential savings of an appliance are offset by the consumer’s behavior. For example, consumers may leave lights on longer because they know the bulb is energy efficient.

After the panelists spoke, attendees broke into groups and participated in a World Cafe Breakout Session to discuss ways to close the split incentive between renters and landlords. There was lively discussion among the 95 participants about incentive programs, outreach and education, access to information, energy audits, marketing strategies, creating better relationships between renters and landlords, and promoting healthy homes.

World Cafe Breakout Session

World Cafe Breakout Session

The symposium facilitator, Chris van Daalen, generated a report on the results and he even created a plan for actionable strategies with key participants as leaders to keep the momentum going. I encourage you to read the in-depth Report to the Community linked below. Included in the report are many resources on energy efficiency, rebate programs, and people to contact who want to help you make a healthier, cost-effective home.

 

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