Energy efficiency of rented homes

This week the Government has outlined new proposals to increase the energy efficiency of rented homes. The plans are set out in a consultation document produced by the Department of Business, Energy and Industrial Strategy and  it is asking for comments by the end of December.

Key objectives are to:

• Deliver significant emissions reductions
• Decrease bills for low income and vulnerable tenants, in support of the Government’s statutory fuel poverty target;
• Reduce energy bills and ensure warmer homes
• Support investment in the domestic retrofit supply chain
• Increase energy security as a result of lower demand on the grid and reduced fuel imports.

The intention is to improve the energy efficiency of the rented housing stock, while at the same time increasing both the quality of homes in the PRS and boosting property values for investors. This will be achieved via a four-point plan that involves:

• Raising the energy performance standard to Energy Performance Certificate energy efficiency rating Band C;
• Achieving the improvements for new tenancies from 2025 and all tenancies from 2028
• Increasing the maximum investment amount, resulting in an average per-property spend of £4,700 under a £10,000 cap;
• Introducing a ‘fabric first’ approach to energy performance improvements, ie upgrading the performance of the materials that make up the building fabric itself, before considering the use of mechanical systems.

“quality, value and desirability” of homes

The consultation document runs to almost 50 pages but it is worth reading in full because there are some serious implications for landlords. The Government’s aim to use these proposals to increase the “quality, value and desirability” of homes in the PRS is one we can all support. But achieving this has a cost attached. Grants and subsidies to carry out improvements are available in some cases but ultimately it is landlords who will have to put their hands in their pockets. And as Landlord Today comments “measures to enforce the new regulations may ultimately involve agents and portals being ordered only to advertise those rental properties that conform with the energy efficiency targets”.

PRS is becoming more important than ever

The devil is always in the detail. So before commenting on these proposals it is worth reading the small print carefully. In future tenants will be able to request that energy improvements are made to the property they rent. Landlords will be fined if they don’t comply. The regulatory landscape is shifting under landlords’ feet once again – at a time when the PRS is more important than ever. Of course energy efficiency is vital if we are to tackle climate change and provide decent, affordable homes for tenants. But more carrot and less stick might be a better way to get landlords on board.

You can read the consultation in full here, and responses must be submitted by 11.45pm on 30 December.