The Rental Home Efficiency Problem

There is a fundamental problem with energy conservation as it relates to homes that are rented from a central organization, such as a realtor. It’s a very simple problem: the realtor pays for infrastructure, but the renter pays for the utility bills. This setup makes sense at a first glance. Renters shouldn’t have to pay to renovate a home that they may only be living in for three months, and a realtor shouldn’t be held hostage to the utility demands of its renters. Hence the current arrangement seems reasonable.

But a fundamental problem here is that there is no incentive for a realtor to go to any great ends to make a home more heating or energy efficient, since they don’t have to pay any part of the utility bill. What does it matter to them if the home needs twice as much heat because the doors don’t have weatherstrips and the windows are single paned? And even the environmentally-conscious renter will be loathe to lay down a couple of thousand dollars on a home that they may soon be moving out of: even if they would like as many homes as possible to be inefficient, only the extremely rich can afford to pay for homes not their own to be retrofitted. So currently, most rental homes that I’m aware of are horribly energy inefficient, without an obvious remedy.

I therefore have a proposal that might be workable for all parties involved. Realtors should pay 10% of their renters’s heating and electricity bill. This is a small enough percentage that renters won’t feel compelled to go on an energy binge (10% off doesn’t exactly feel “subsidized”), but it is enough that the rental agency would feel compelled to assist the renters in making their homes more energy-efficient.

Most renters in the San Francisco bay area are making absurd profit margins anyhow, so 10% of a (max) $200 energy bill is $20/month of cost for them on intake of an average $3000/month in rent. This is hardly going to put them out of business, considering that it’ll be a chunk less than 1% of the rent income. A few hundred thrown in here and there on, say, weatherproofing, could pay off quickly. A few dollars more a lightbulb for fluorescents versus incandescents could quickly return the investment.

Without a co-pay structure like this that ties the utility costs in part to the entity responsible for structural investments, rental homes cannot help but remain horribly inefficient.