Achieving Sustainability in Rental Properties

by Anne Watson

For many years I believed that the most sustainable way to live was on a homestead out in the countryside. While that’s a lovely and appealing vision, I feel now that if sustainability is really going to happen for our society, it must come to the cities. I’ve been very interested in the challenges that cities face when it comes to sustainability, and one of the biggest hurdles to achieving that net-zero goal is wrapped up in the split incentive inherent to rental properties. Let me explain.

In Montpelier, 40 percent our housing units are rentals. While those who own homes have more flexibility to manage their energy costs or to adopt cleaner, more efficient heating systems, renters effectively have no agency to manage their energy profile. Sure, renters have the option to purchase “Greener GMP” that sources its electricity from renewable sources, but heating costs and sources are usually outside of their control.

Furthermore, if landlords don’t include heat in the rent, then they really have no financial motivation to make any energy improvements. They may have other motivations to do so, but the landlord may not see any increased income from the improvements. This creates what’s called a “split incentive.”

Some cities have addressed this split incentive, in part, through building code enforcement in rental properties with a rental inspection program. Rental inspection programs are usually instituted on the basis of life/safety complaints in rental units. This might include things such as floorboards that are rotting out, an infestation of rats, or other hazards. But Montpelier just isn’t seeing the kind of life/safety complaints that would warrant the level of expenditure necessary for a rental inspection program. That’s a long way of saying that the normal way of addressing weatherization in rentals is probably not going to work for us.

So what options do we have? Here are a couple of example solutions. Burlington Electric created a program specifically for renters that helped them replace oil heat with heat pumps for space heating. Not only was this good for the renter’s carbon footprint, it was also good for their wallets. Burlington Electric helped to finance the infrastructure change and passed the savings on to the renters. Renters were able to start paying less for heat immediately. Perhaps we could create a similar program in Montpelier.

Another option for weatherization of rentals could include some kind of tax incentives for landlords who do not include heat in the rent. We provide tax stabilization to attract businesses to town. Perhaps we should have some kind of tax “stabilization” for landlords who choose to make environmental upgrades to their apartments.

I hope it goes without saying that protecting renters from the fluctuating costs of fossil-fuel heat is a worthwhile endeavor. Helping renters switch to more renewable energy sources will help keep housing more affordable, which will then help keep people in their homes and Montpelier an accessible, vibrant community. Let’s literally and figuratively insulate the poorest among us from dependency on fossil fuels.

Anne Watson is the mayor of Montpelier.

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