Owning a rental home can come with a lot of big expenses. The three most expensive things for repairs and maintenance are typically;  plumbing, electrical and HVAC. As a property management company, we are responsible for maintaining, repairing and replacing these items, for both our tenants and our investors. 

We live in the south, so air conditioning is not an option, it is a necessity. For the past few decades, R22, better known as Freon, was the dominant refrigerant used in HVAC systems. However, due to its ozone-depleting properties, the Environmental Protection Agency (EPA) mandated a phase-out, leading to the adoption of R410A, which is more energy-efficient but still has a high Global Warming Potential (GWP). 

Because the GWP is still so high for R410A, the government is getting involved again and providing an updated mandate. Starting next year, January 1, 2025, new regulations will phase out the use of R410A in residential and light commercial HVAC systems in favor of R32 and R454B, which belong to the A2L refrigerant class. These new refrigerants have a significantly lower GWP. 

This shift is part of a broader effort under the American Innovation and Manufacturing (AIM) Act to reduce the environmental impact of refrigerants.

Impact on HVAC Systems

While these new refrigerants are more eco-friendly, they are also mildly flammable, which means that existing HVAC systems cannot be retrofitted to use them. Consequently, homeowners, investors and property managers will need to replace their entire HVAC systems to comply with the new regulations. This requirement is expected to increase costs, with some estimates suggesting that new systems could be up to 30% more expensive due to the redesign and safety measures needed for A2L refrigerants.

Long-Term Considerations

The transition from R410A to R32 and R454B is similar to the earlier transition from R22 to R410A, which also caused a significant shift in the industry. As the supply of R410A decreases and becomes more costly, maintaining older systems that rely on it will become increasingly difficult and expensive. Therefore, it’s essential to plan for these upcoming changes and budget for potential system replacements sooner rather than later.

These changes will indeed have a financial impact on investors, particularly those managing properties in the South where HVAC systems are essential. Here at Houses and Then Some Rentals & Realty, we want to help you prepare for the upcoming expenses, and ensure that your properties remain compliant and energy-efficient in the years to come.