Energy renovations in rural rental homes face a critical hurdle: the “split incentives” challenge. Simply put, why should a landlord pay for an expensive upgrade (like insulation) if the tenant gets all the benefit of lower energy bills? This common issue stops vital improvements and contributes to energy poverty in vulnerable rural districts.
To address this challenge, the “Q-SpliT” (Quantification of Split Incentives) tool, originally developed under the Horizon 2020 ENPOR project, has been expanded and adapted within RENOVERTY to support the fair and effective design of energy renovation strategies in rural private rented housing. The tool enables the assessment of how costs and benefits from renovation measures can be distributed between landlords and tenants, providing an evidence base to inform equitable financing mechanisms and policy recommendations.
The Q-SpliT tool goes beyond simple energy savings. It quantifies the full range of benefits—including the increase in the building’s value for the landlord and the energy savings, improved comfort, and health conditions (multiple benefits) for the tenant. It then precisely calculates the “split incentive gap,” which is the difference between the rent increase a landlord would expect and the rent increase a tenant would consider fair based on their savings.
A key aim of this report is to present insights from the application of the Q-SpliT tool in the three RENOVERTY pilot regions where private renting is identified. The findings could serve as a valuable input towards the finalisation of the project’ Renovation Roadmaps (REERs), by quantifying split incentives associated with priority renovation measures and supporting the development of socially just, financially viable renovation solutions tailored to the needs of rural households.
