Upgrade to Gas Central Heating?

[bdh198]

I have a first floor one bedroom flat that I've been letting out for five years. When I acquired the flat I had the gas capped off and installed an electric boiler and electric wall hung radiators. This is because it was a cheap option and avoided the need to get an annual gas safety certificate (main reason was the cost).

However, my boiler has now had a problem which cannot be repaired and it needs to be replaced. My gas certified plumber can put in a like for like replacement for around £500, or an upgrade for £1,200. He has also suggested considering reinstalling the gas and putting in a small combi boiler and new pipe work to replace the electric heaters with centrally heated ones. The cost of this will be in the region of £2,500.

My questions is, is the reinstallation of gas central heating something worth considering? It's considerably more expensive to reinstall gas and I'm debating the cost/long term benefit of it.

I would be extremely grateful for any views any other landlords have. Would gas installation really encourage a higher rent (currently £550pcm)? There is no problem finding tenants in the area. When advertising for tenants recently, one day of viewing resulted in four immediate offers at full asking price. Also, if I came to sell in the future, does gas central heating play a significant part in the considerations of first time buyers/landlords (as they are the likely groups to be looking at such a property)? Would it increase property value, or just make a sale slightly more likely?

Any views appreciated.

[Richlist]

Ok here is my twopennies worth..

* Generally gas heating will not achieve a higher rent. Obviously there are exceptions but in most cases you will not recover the money through higher rents.

* If or when you eventually sell the property then gas heating may command a slightly higher asking price but will likely just be easier/ quicker to sell..

* I'd probably stick with electric......and don't forget to take the tax situation into account as that saving can reduce the cost significantly. Generally repairs & maintenance can be offset against rental income. Improvements can only be offset against capital gains when you sell. 

[Melboy]

I can answer or at least confirm one of your questions and that is I have experience of houses that would not sell or at least not command viewings because there was no GCH.

We have installed GCH into properties on behalf of the seller to encourage more viewings which led onto a sale of the property and with one property I remember the seller put most of the installation cost onto the revised asking price and it was sold at that price or near to it..

With your flat though it is really down to you. Can you spare the £2,500 to carry out the work? Is the flat small enough just to have wall hung electric heaters?  Is it a modern flat with excellent insulation to walls and floors and d/glazing?

[Richlist]

I think in this particular example, which is a flat that the OP has no problem letting in its current condition and which he intends to continue to let,  the extra expense of a gas installation does not make business sense......even after tax.

I agree with Melboy, who's family have lots of experience with gas installation. Houses though, are a different situation. If the property were a house then a gas installation would in nearly every case be cost effective....but not with a flat.

[bdh198]

Thanks for the replies. The tax point made by Richlist is a good one. When I come to sell the flat it is unlikely to have increased much above the nil rate capital gains limit, and even if it has it is better to be using the expense against a 40% income rate than a 28% capital rate.

The cost of installation is also an issue as I have a couple of other big bills related to the property coming up in the next month or two.

The flat is part of a converted Edwardian terrace and has one flat above and one below. It is reasonably well insulated and only has a couple of rooms (bedroom, living room-kitchen and bathroom. The wall hung heaters have worked well the last five years. I have not met any real incentive to have gas installed up until now. The property is currently quite attractive to the rental market (perhaps I'm not asking enough!), and I've never had difficulty finding a tenant.

Melboy's experience of installing gas prior to sale and then being able to incorporate the cost into the selling price in encouraging and leaves open the option to do that if I need to in a few years time. In any event, I'm not looking to sell in the immediate future.

[Melboy]

I have a small modern flat which is electrically heated by wall hung heater's plus the option for the use of 2 free standing portable heater's by the tenant. I have never had any complaints about heating this flat from tenant's.

I could put in gas heating but why go to the expense?  I am not planning on selling either and I always manage to let this flat in a few days.

[Carryon Regardless]

You might also consider the local competition.

My N Wales flats are all electric, and this is common for the area. 1st choice would be for GCH but if you aren't offering worse than many others locally is it that much of an advantage?

Can't you judge its desirability from viewers, or even T's comments?

As RL recovering the additional cost will take some doing. Another thought is to save the effort and become more competative by offering at a lower rent, as a sort of compensation. A cost analysis of how long it would take to pay for the GCH at the rent difference sounds reasonable, as I used to do when compact flourescent lamps became a rage. There was cost disadvantage to a change out.