Exploring investment requirements for energy efficiency upgrades in the private rental sector

Improving the energy efficiency of the residential housing sector represents a key challenge in meeting Ireland’s carbon reduction targets. While challenges exist across the sector in terms of incentivising upgrades, these difficulties are more pronounced in the rental sector, which suffers from the longstanding split incentive issue between landlords and tenants. Split incentive refers to the situation whereby landlords face the investment cost while tenants receive the benefit in terms of energy efficiency. However, to inform any policy response, it is important to quantify the scale of the investment requirements and to consider the profile of landlords and their financial capacity to make the required upgrades. 

In this report, our research objectives are three-fold. First, we use a range of micro datasets to explore the energy-efficiency profile of the housing stock in the residential private rental sector (PRS). We draw on the Residential Tenancies Board (RTB) annual registrations data and the Sustainable Energy Authority of Ireland (SEAI) building energy rating (BER) research dataset. Second, we use unique micro data on investments on social housing upgrades and SEAI grants to cost the scale of upgrading the stock using a range of scenarios. Third, we focus on household landlords in Ireland, and explore their ability to finance investments in energy efficiency in rented dwellings using micro data from the Central Statistics Office’s (CSO) Household Finance and Consumption Survey (HFCS).