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Concerns raised over new energy efficiency proposals

Wednesday 20 January 2021

Propertymark has responded to the UK Government’s consultation on Improving the Energy Performance of Privately Rented Homes in England and Wales by highlighting a number of concerns. These relate to affordability and the need to look beyond a one-size fits all policy and develop proposals that work with the different age, condition, and size of properties in the private rented sector.

Central to the UK Government’s proposals are for all new tenancies from 1 April 2025 and all existing tenancies by 1 April 2028 must meet band C or higher on an Energy Performance Certificate (EPC). The UK Government also wishes to increase the cost cap to £10,000 per property; set a requirement for landlords to install ‘fabric first’ measures; as well as requirements on letting agents and online property platforms to only advertise and let properties compliant with the rules.

For more detail on what the plans included you can read our original article encouraging letting agents to respond to the consultation.

Unrealistic

Propertymark believes that forcing tighter restrictions on landlords, without sustained financial support, is too ambitious and will not be achieved. A key concern from members is that the target is unrealistic and it is impractical to improve many properties based on the construction type and age. For instance, Wales has the oldest private rented dwelling stock in the UK, with 43 per cent built before 1919. Furthermore, too large a proportion of existing privately rented stock requires significant improvements to meet the C rating, which would reduce the amount of housing stock available to rent.

Set up long-term goals

The UK Government must set a long-term goal with incremental targets to a property rather than seeking to meet one-off targets for energy efficiency. To this end, for the private rented sector in England and Wales, it is only a year since rules came into force to ensure all private rented tenancies meet EPC Band E, but the UK Government has now proposed going to Band C within five years.

Incentives and funding

Without incentives or accessible funding, it is likely that targets for the private rented sector will not be met. Under the Green Homes Grant scheme, the UK Government funds up to two-thirds of the cost of home improvements up to £5,000. However, landlords must redeem the voucher and ensure improvements are completed by 31 March 2022. Furthermore, the scheme is only applicable to landlords in England and not Wales. The UK Government must provide better funding options for the private rented sector.

Portals

Propertymark believes that portals can play a role a greater role in aiding compliance and providing accurate information to consumers. However, a number of issues must be taken into consideration when linked to the energy efficiency standards. For instance, it is not common practice to advertise the tenancy type or whether the property has an exemption under the energy efficiency rules. Furthermore, rooms in shared accommodation are not required to have an EPC unless it is required for the property as a whole. Private landlords cannot advertise directly on property portals, so based on the consultation document which states that around 43 per cent of landlords use a letting agent to either let or let and manage a property for them, this means the UK Government is focusing a large proportion of it is future enforcement activity and compliance on less than half of the sector.

Listed buildings

For listed buildings and those in a conservation area to be able to successfully comply with minimum energy efficiency rules, Propertymark believes that the UK Government must do three things. Firstly, develop and set out a clear list of approved work that clearly defines what would or would not unacceptably alter the character or appearance of the building. Secondly, publish specific and separate guidance on improving energy efficiency in listed buildings and those in a conservation area. Thirdly, consider removing the requirement for minimum energy efficiency standards from listed buildings and those in a conservation area by offsetting the carbon emissions through planting trees and sponsoring offset schemes.

Enforcement

To bring in line with other penalties brought into force under the Housing and Planning Act 2016 and allow for consistency across the sector, Propertymark believes the UK Government should seek primary powers to increase the maximum fine level to £30,000 per property for breaches of the rules. However, we do not believe that local authorities have the capacity required to enforce standards in the private rented sector. There are not enough resources and enforcement is not a high enough priority for Councils. To this end, the proposed introduction of a PRS property compliance and exemptions database should not be implemented at the expense of local authorities prioritising enforcement. Before moving to a PRS property compliance and exemptions database, the UK Government must ensure the existing Exemptions Register is fit for purpose.

Impact of COVID-19

Propertymark has outlined that there are two main long-term impacts of COVID-19 that could impact landlords being able to make the required energy efficiency improvements by April 2025. Firstly, landlords will continue to be impacted financially with extreme COVID-19 related arrears still yet to be recovered. Secondly, difficulty for the sector to comply with new and existing legislation, which includes access to the property to carry out maintenance work, renovation, checks or make energy efficiency improvements.

Propertymark's response

Propertymark’s wide-ranging and detailed response was put together following input from members and we are continuing to engage with civil servants and politicians to ensure they understand the practical implications of the UK Government’s proposals.

View the response