Millions of apartment owners in England and Wales are being shut out of money-saving technology like heat pumps and solar panels. It is a financial obstacle for individuals that also risks undermining the UK’s aim of decarbonising the energy system.
Alex Harris had not even completed the purchase of his apartment in the UK city of Cambridge when he first asked for permission to install solar panels.
The 30-year-old, who works for a renewables company, says his motivations were simple: “Save money, reduce carbon and just do the right thing.”
But the request was swiftly turned down by Cambridge City Council, which owns the small block where he now lives. His enquiry about fitting a heat pump was also turned down, as was a plea for an electric-car charger.
That means he is missing out on savings. By one calculation, access to these three technologies, plus home insulation and an electric car, would save the average British household nearly GBP20,000 ($34,559) over a decade. But after two years of discussions with the council, which is targeting net-zero carbon emissions by 2030, Harris is no further forward. “There’s been absolutely no change in the situation,” he says.
Harris may be a homeowner, but he is also a leaseholder. Like millions of others in England and Wales, he has bought the right to live in his apartment for a set number of years — but does not actually own its walls or roof. Those belong to the freeholder, who is also responsible for building maintenance.
The leasehold system is a quirk of British property law dating back hundreds of years that leaves about 14% of the country’s homeowners with limited control over the place where they live, including how it is heated and powered.
In a statement, a spokesperson for Cambridge City Council says that the situation for leaseholders wanting to install green technologies was complicated, because changes had to benefit and be paid for by all leaseholders living in a building. The spokesperson added that the council recognises that this is an area requiring improvement.
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Missing out
Apartment owners tend to be relatively young, with less disposable income than older homeowners. The UK has some of the highest energy costs in the world, with gas prices up 53% in the past five years. Energy security is also a growing concern; interest in solar and electric cars has risen since the war began in Iran earlier this year.
Energy-efficient technology like heat pumps can save homeowners money directly, plus households with electric heating, batteries and solar can increasingly benefit from energy pricing that rewards storing up power at cheaper, off-peak rates to use at expensive times.
The problem is that many green technologies require building modification. Solar panels need to be affixed to a roof, which is not owned by the leaseholder. Heat pumps require drilling through walls, while electric-car chargers would be placed in a communal area that is owned and managed by a freeholder. It is also difficult to add cooling measures like air conditioning or external shutters, for the same reasons.
Information on how often freeholders reject installation requests is limited. But UK apartments are lagging houses in terms of installation rates. Some 3% of buildings in England containing apartments have rooftop solar panels installed, compared to 7% of houses, according to government figures, while five times as many houses have heat pumps.
“If we all had electric cars and solar panels and a battery, the cost-of-living crisis would already be over,” says Adam Bell, a partner at consultancy Stonehaven who focuses on energy. For a typical household spending around GBP1,600 a year on home energy and GBP1,200 on a gas car, going electric could save about GBP1,500, he says.
Younger homeowners are also often more open to clean-energy tech than their older counterparts, according to Nesta, a UK-based non-profit that researches the energy transition.
If this segment of the population is held back from installations, “it’s going to be very difficult for the government to meet targets, which would help them to meet their legally binding carbon budgets”, says Katy King, a director at Nesta. Many leaseholders do not realise that their rights are so restricted, she adds.
Freeholders — who may be individuals, corporations, public bodies, investors or pension funds — are required to accept “reasonable” requests from leaseholders for building modifications, but the regulations do not define the term clearly, King says.
Many freeholders are unfamiliar with green technology and some are concerned about what could go wrong, King has found when conducting focus groups. In addition, freeholders generally do not see the savings or other benefits of an installation.
Freeholders who do approve heat pumps and other tech sometimes charge leaseholders additional fees for this permission, says King. Apartment owners also have to comply with stringent rules on unit size, noise and placement.
Return on investment
As the UK government continues to encourage a move away from fossil fuels, leaseholders are worried about being left behind, and what that would mean for their finances. Sam Mangham, a 39-year-old academic, owns a leasehold ground-floor flat in Southampton on England’s south coast. He first sought permission to install a heat pump more than two years ago, but the management company responsible for maintaining the building said they did not know enough about the technology to allow him to proceed.
A recent home survey suggested his boiler will soon give out. “We’re definitely concerned that our boiler will fail and we’ll have to replace it with another gas boiler, given the pending phase-out,” he says. “We don’t want to spend money on something that’ll be more expensive to run and become increasingly hard to maintain.”
In European countries such as Germany, “balcony solar” — portable panels that can plug into a wall socket — has become a popular way for renters and other apartment-dwellers to subsidise their energy bills. The UK government plans to allow the sale of similar units.
But many renters and leaseholders probably have no legal right to install a panel or heat pump on their balcony and those who do may still face additional fees, according to the Leasehold Knowledge Partnership, a charity offering help and advice to leaseholders.
Allume Energy, a company that specialises in installing solar panels in blocks of flats that split the energy input between multiple electricity meters, has so far been targeting subsidised homes run by UK local government or housing associations, but is aiming to expand into privately-owned blocks of flats over the next year.
Its customers typically spend between GBP2,500 and GBP4,500 per flat and save up to GBP600 a year, the company says.
It is exploring ways to give freeholders a cut of those proceeds, says Jack Taylor, the company’s European general manager. If a freeholder is “OK leasing the roof at a charge or getting some sort of return on investment for the system, then we can look into models like that to essentially encourage them to say yes”, he says.
For now, most leaseholders like Harris are stuck with their gas boilers and solar panel-free roofs. “I really just want to be able to take the gas supply out so I’m less exposed to gas-market fluctuations,” he says. “It is pretty frustrating.”
Chart: Bloomberg
