Tenants pay more, not less for homes with poor energy labels

While owner-occupied homes with a good energy label sell for more than those with poor labels, the opposite is true in the rental market. Real estate advisor Colliers found that tenants pay more for rentals with a poor energy label than for well-insulated homes with other energy-saving measures in place, NOS reports.

Colliers investigated the relationship between rent and the energy label for 75,000 new leases in the private sector in 2021 and 2022. Tenants paid an average rent of 1,357 to 13,73 euros for rentals with labels A, B, or C. For homes with the low labels D, E, F, or G, the average rent was between 1,440 and 1,498 euros.

The rent per square meter is also higher for properties with a poor energy label. According to Colliers, this is because newer homes with high labels are often larger than older homes with low labels. And the larger a home, the less you pay per square meter. Another factor is that poorly insulated, older homes are more often located in city centers, where rents are higher.

“Unlike owner-occupied homes, a good energy label on the rental market is not rewarded, even in the current time with explosively increased energy costs,” said Colliers. The real estate advisor blamed the shortage of rental properties, leaving tenants with few alternatives. “There is no urgency or financial incentives for landlords to make the rental property more sustainable since it does not influence the rentability and amount of the rent.”

Tenants’ association Woonbond has been raising concerns about poorly insulated rental properties for some time. Over the winter, the association received floods of reports from people losing money on heating due to the high energy prices.

Vastgoed Belang, the association for private landlords, told NOS that landlords would like to make their properties more sustainable. But their homes are often old and, therefore, complicated and expensive to modify.

Minister Hugo de Jonge of Housing recently announced that the government would ban renting out homes with energy labels E or lower from 2030. The government agreed with housing associations that they will make all their homes sustainable enough for an energy label D or higher by 2028.