Green Renting

Do Tenants Truly Care About Sustainability?

As sustainability takes centre stage, eco-conscious living has become a growing focus for consumers who want to lower their environmental impact and enhance their wellbeing. This trend extends across industries, with the rental housing market also seeing an increased interest in sustainable practices. According to MRI’s 2023 Rental Housing Trends and Preferences report, 72% of renters value environmentally responsible property management, and 74% want landlords to adopt energy-efficient technologies. However, while these numbers indicate awareness, the real question is whether renters are genuinely committed to green living—and what motivates their choices.

Eco-friendly Living: Driven by Ethics or Savings?

The interest in sustainable rental homes is increasing, yet motivations appear to be split between environmental ethics and financial savings. According to PwC’s 2024 Voice of the Consumer Survey, consumers are willing to pay an average of 9.7% more for sustainably sourced goods. Similarly, energy-efficient rental properties are gaining traction, with JLL’s 2022 Tenant Survey Report showing that 83% of renters view energy efficiency as either crucial or important, and over 40% are willing to pay extra for such homes. A 2022 YouGov/Legal & General Capital survey echoes this, finding that renters would pay up to a 13% premium for energy-efficient properties.

When asked why they would buy or rent a low carbon home, 65% cited reducing their carbon footprint or combating climate change, while 37% focused on saving money through lower energy bills. While ethical considerations drive many, cost-saving benefits remain a strong motivator. This dual appeal makes sustainable homes increasingly desirable for renters, with many willing to pay a premium for them.

Energy Habits: Renters vs. Homeowners

Interestingly, renters often show a greater willingness than homeowners to adjust energy habits, driven by financial pressures rather than the ability to make structural improvements. The temporary nature of renting discourages investment in long-term eco-friendly upgrades, leaving renters reliant on behavioural changes to save energy.

According to Rightmove’s Greener Homes Report 2023, 76% of renters are willing to change their energy habits, compared with 70% of homeowners, influenced by rising energy costs, with the energy price cap having increased by 10% in October 2024, potentially adding £558 annually to bills for households in inefficient homes. For renters, prioritising energy efficiency when choosing a property is becoming more common, with 19% of renters citing it as a major factor, compared with 13% of prospective buyers.

Gen Z and Sustainability: Are They Walking the Talk?

Often touted as the ‘sustainability generation’, Gen Z’ers are recognised for their eco-conscious values and high expectations for brands to lead on social and environmental issues. However, findings from the Homeviews BTR Report 2024 and Utopi’s 2024 PBSA Market Report suggest a more complex reality.

While McKinsey highlights Gen Z’s commitment to addressing climate change and advocating for equity, Homeviews data reveals that only 63.8% of 18–24-year-olds consider sustainable property features important, compared with 86.1% of those aged 65 and over. Co-living residents—largely younger individuals—also show the least interest in sustainability features among rental types.

Behaviourally, Gen Z renters often choose convenience over sustainability. Utopi found that 85% of students open windows to cool their rooms, compared with 34% who adjust heating, while 52%

increase heating rather than layering up when cold. This lack of connection between personal behaviours and environmental outcomes is compounded by only 18% of students believing their actions have a significant impact on the planet.

Financial incentives may be key to driving change. Utopi’s data shows that 59% of students would adopt greener behaviours if offered reduced rent, while smaller numbers favoured real-time energy use data (16%), more education (15%), or rewards (8%). Bridging the gap between ideals and actions will require targeted education, tangible benefits, and innovative engagement strategies.

EPC Ratings: Do Renters Value Them?

Government regulations are pushing the rental market toward higher energy efficiency, with properties required to have an EPC rating of C or above by 2030.

Shawbrook Bank’s Confronting the EPC white paper (2022) found that younger renters are more likely to consider EPC ratings when choosing a property, with 72% of those aged 18–34 always checking the rating, compared with just 52% of renters aged over 55. However, the report also highlighted a substantial knowledge gap. Only 7% of respondents claimed to ‘know a lot’ about EPCs, while 27% admitted to being aware of EPC requirements but knowing nothing about them. Alarmingly, another 27% had never heard of Energy Performance Certificates, and over half (56%) were unaware of the rating of their current rental home.

Despite inconsistent awareness, the financial benefits of higher EPC ratings are undeniable. Research from Hamptons shows that renters living in properties rated EPC C save an average of £499 annually compared with those in EPC D-rated homes. The savings jump to £1,248 when comparing EPC C with EPC E-rated properties.

These figures underscore the need to educate renters about EPC ratings and the advantages of energy-efficient homes—not only for their environmental benefits but also for their potential to significantly reduce living costs.

GAA’s View: Leveraging Sustainability to Attract and Retain Residents

For institutional landlords and operators, catering to eco-conscious renters offers financial, reputational, and regulatory advantages. Energy-efficient systems lower operating costs, while green features enhance tenant satisfaction, often leading to longer leases and reduced turnover. Properties with strong eco-credentials also rent more quickly, helping operators remain competitive.

However, utility-inclusive billing models can discourage sustainable behaviours, as tenants lack direct incentives to reduce consumption. Green leases could address this by incorporating rewards for meeting energy and water-saving targets, such as cashback or rent rebates. Gamification, peer comparisons, and engagement strategies could further motivate tenants to adopt sustainable habits. Several BTR operators are implementing these techniques to encourage behaviour change through social benchmarking, including ‘Energy Champions’ leaderboard rankings to highlight top savers with public recognition, as well as personalised feedback, such as ‘you used x% more/less energy than your neighbours last month.’

Despite these opportunities, the market faces challenges. A housing supply shortage means renters may prioritise availability over eco-friendliness. Individual landlords forced to sell their properties due to the cost of meeting new standards could exacerbate this imbalance, providing BTR operators a chance to lead with sustainable, future-proof housing solutions.

Conclusion: Balancing Ethics and Practicality

The green rental market reflects a mix of ethical and financial motivations. While renters increasingly value energy efficiency and sustainability, their behaviours often depend on convenience and incentives. For landlords and property managers, investing in sustainable properties not only meets regulatory demands but also attracts tenants seeking cost savings and eco-friendly living. As the market evolves, innovative solutions like green leases and gamified incentives could help bridge the gap between ideals and actions, supporting a greener future for renters and landlords alike.