Left in the cold: Study finds most renters shut out of energy-saving upgrades

As winter heating costs rise, new research from Binghamton University, State University of New York reveals a cold truth. Renters – who make up approximately ⅓ of the U.S. population – are missing out on energy efficiency improvements that could lower their bills, make their apartments more comfortable and improve their health.

This study, “Still muddling through: Local sustainability leaders and energy efficiency in rental units,” was published in Energy Research & Social Science. It looks at how local governments across the country grapple with this widespread challenge.

More than 90% of renters in the United States pay at least a portion of their own energy bills, with approximately three-quarters paying the full cost. But this causes tension between the renters who want to save money on their bills and landlords who are the ones responsible for making most energy efficiency upgrades.

“Renters don’t own the building, so they can’t put in insulation, they can’t put in better appliances, and so they have a hard time controlling energy usage or costs. And the people who have the power and the money to make energy efficiency upgrades – the landlords – they don’t reap the financial benefit,” said George Homsy, associate professor and director of environmental studies at Binghamton University.

As a result, landlords often do not make these upgrades, and renters are quite literally left out in the cold. Renters can make small improvements on their own, such as putting sheets of plastic over windows, but these often have only a superficial impact on reducing bills or warming up chilly units.

“The number-one energy upgrade that we should be doing in our homes is adding insulation to the walls and roof, upgrading doors and windows, and so on,” said Homsy. “Such improvements save a ton of money. It makes a home much more comfortable. But you need to own the building to do these kinds of upgrades. And that’s the challenge that we have.”

This is known as the “split incentive” issue, and it has real ramifications beyond lowering costly bills and making a space more comfortable, said Kristina Marty, co-author and professor of public administration and policy at Binghamton University.

“Renters have greater rates of asthma and are more likely to have other health problems because of living in these substandard dwellings,” said Marty. “And so it’s not only inequitable that homeowners can spend less money per square foot on energy. Renters’ inability to improve the efficiency of their units also really impacts the quality of their lives.”

To examine this issue, the Binghamton researchers conducted one of the first-ever studies to explore this challenge from the perspective of local government sustainability leaders across the United States. The team interviewed 59 municipal and county government officials, focusing on the policies and projects different jurisdictions have to promote greater energy efficiency in rental units.

Based on these interviews, the researchers identified several initiatives that these communities offer to increase efficiency. However, most of these efforts were likely to help only a small percentage of rental units in a jurisdiction. Among the factors contributing to these issues, the researchers mention landlord reluctance to make even basic upgrades, poor rental housing stock, hesitancy among renters to participate, and program design issues. (For example, some programs restrict support to rental units in public housing or buildings focused on low-income families).

“These energy efficiency upgrades are costly investments that ultimately increase the value of buildings long-term. But, as you can imagine, if the landlord’s focus is on making a profit, they’re not going to be excited to do these improvements, especially if they don’t know how long they will own the building,” said Marty. “One person talked about a landlord charging $5 to change a light bulb. If they’re going to charge $5 to change a light bulb, they’re not going to put in a state-of-the-art heat pump.”

Another major issue is that some energy efficiency programs are open to all residents in a community, but in practice, only homeowners are often able to take advantage of them because of how they are designed, said Marty.

“These programs, theoretically, could help a renter, except in reality, because renters have to then get permission from their landlord, no one’s really going to take advantage of them. Lots of renters are understandably wary about doing anything that could create tension with their landlord and potentially jeopardize their housing,” said Marty. “So these programs are out there, but most renters will never be able to benefit from them. Instead, they’re mainly helping homeowners. For example, governments commonly subsidize the installation of solar panels – not that it’s not great to subsidize solar panels – but who can afford solar panels? Someone who owns their own house and can afford solar panels. That’s not a renter.”

The researchers did highlight some promising strategies that a few jurisdictions are experimenting with to improve rental unit efficiency, such as incentive zoning, partnering with nonprofits to reach vulnerable populations, and incorporating energy efficiency into rental licensing programs.

“You can institute a rental licensing program, or take one that’s already in place, and add energy conservation requirements to it,” said Homsy. Many communities have rental licensing programs that require inspections of units every few years to ensure they comply with code. “This has worked well in one of the communities we studied. Landlords in this jurisdiction have to improve the energy efficiency of their buildings as part of the rental licensing process, but they can do it in a way that is easiest for them. The flexibility can bring landlords along. The program has ultimately improved the energy efficiency of thousands of units.”