Eco-upgrading the key to get your rental property ahead of the pack

With the increased cost of living currently being pushed to the forefront of media attention and government deliberation, the desire to living more sustainable has now become a priority for most.

Whether it be homeowners, landlords or tenants, the message that is being sent to the industry is undoubtedly aimed at creating more energy efficient and sustainable homes.

MCG Quantity Surveyors managing director Mike Mortlock said that smart landlords who are taking notice are “going green” on their investments are reaping financial rewards.

“The old trope is that you can either be a raging capitalist investor or an eco-warrior, but not both,” he said.

“I beg to differ because there are ways improve your investment’s green credentials while boosting the rent and minimising your tax burden through cost write-offs and depreciation benefits.”

Mr Mortlock said the issue is more poignant than ever after Australian voters voiced their support for climate change action at the Federal election this year.

“We have reached a point where the public values eco-friendly moves designed to help address climate action. Think global, act local as the saying goes,” he said.

“This extends to housing too with energy-rated design part and parcel of most building approvals.

“Energy saving measures in investment properties result is more tenant appeal, so, higher rents, lower running costs, depreciation benefits and a cleaner planet.”

Mr Mortlock outlined five moves property investors could make to help both the planet and their bank balance.

Heating and cooling

Warming and cooling are usually major carbon emitters, with air-conditioning systems and high-energy heaters all hurting the planet.

But there are moves you can make that will keep the environment happy.

Insulation to roof and wall cavities is an excellent start, for around $2000, you can have your ceiling blanketed and this can be claimed as a capital works deduction.

The installation of a ceiling fan helps too, and if it costs less than $301, the outlay is fully depreciable on your next tax return.

Then there’s window film which can keep out the heat in summer, a window tint will set you back between $50 and $100 per square metre in most instances and is a capital works deduction.

Power generation

Going off-grid is a move many find appealing, and there are ways to create independent energy sources on a small suburban block.

Solar systems and battery storage are easy retrofits, while not cheap (a decent system installed will cost between $5000 and $15,000), they can be worth it.

Apart from being appealing to tenants, installing solar allows you to depreciate its cost by 10 per cent per year under the diminishing value method.

There’s even the case for a wind turbine if your investment is an acreage.

A wind turbine costing around $2000 can generate formidable power, best of all, depreciation benefits based on an effective life of 20 years gives you another 10 per cent per year via the DV method.

Water collection

Water tanks have been a staple in Aussie homes for decades, using tank water for toilets and washing machines makes sense.

Also, they keep the possibility of tenants having to pay excess water charges to a minimum and can mean a rent boost for the right property.

Water tanks can be installed and plumbed into a home for well under $10,000 and as of July 2019, rainwater tanks were listed by the ATO as a plant and equipment item.

This means that rather than a 2.5 per cent deduction, you get a whopping 40 per cent rate of claim!

Future proofing for cars

There’s no doubt we’re heading towards a future of electric vehicles, as this develops, why not consider fitting out your garage with a car charger?

This would appeal particularly to tenants in the inner city who are keen to keep their Teslas topped up.

Domestic car chargers cost around $750 to $1500 and I’d expect eventually we’ll see them going into properties as regularly as water tanks.

In the meantime, vehicle chargers will net you a 20 per cent depreciation rate each year.

Gardens a-growin’

Landscaping with mulching and natives makes good sense as natives are low maintenance plants that don’t consume much water.

They also do their bit in converting back carbon emissions and a thoughtfully designed landscape might set you back $10,000 to $20,000, but you can claim some of it back through your tax return.

Things such as plants and turf won’t attract any deductions, but hard landscaping such as retaining walls, paving, concreting and fencing will.