Energy efficiency has once become a hot topic in the UK rental sector, with new rules set to apply to both private and social housing.
All rented housing will need to achieve “decent standards of energy efficiency” as part of Labour’s plans to eliminate “cold, draughty homes” from the market and improve tenants’ living standards, as set out by energy secretary Ed Miliband at this week’s Labour party conference.
Under the Conservatives, upcoming changes to minimum energy performance certificate (EPC) ratings in privately rented houses had been scrapped, which would have seen all homes being required to achieve a rating of C or higher from 2028. At the moment, all rental properties must be graded as E or higher.
In the social rented sector, there is currently no minimum energy efficiency standard – but Ed Miliband’s latest speech brings to light plans to level the playing field for all UK tenants, whether they are renting privately or living in local authority accommodation.
What is the energy efficiency plan?
The average EPC rating across homes in the private rented sector at the moment is D, with ratings ranging from A (the most energy efficient) to G (the least energy efficient). Studies have found that rental homes have an overall higher EPC rating on average than owner-occupied properties.
Since coming into power, Labour has reinstated the goal to boost energy efficiency across rental homes. The current target is for all rental properties, across both the private and the social sector, to achieve a minimum EPC rating of C by 2030. As well as private landlords, this will apply to all councils and housing associations in England.
Under previous rules, a spending cap applied to the cost of any improvements a landlord might make to bring their property up to the minimum required standard. If a landlord spent this amount and the property still did not achieve the rating required, the landlord could then apply for an exemption.
In the private rented sector, the problem with this is that such energy inefficient homes are likely to see a significant dip in popularity, with tenants more interested than ever in the energy efficiency credentials of their home. This has been exacerbated by soaring energy bills, with tenants showing a preference for homes with lower bills.
New-build housing stock is the most energy efficient option for buyers and property investors, and has also become more popular among tenants in recent years, who are keen to prioritise a higher standard of living.
Warmer homes and lower bills
Ed Miliband told the Labour party conference: “We all know that the poorest people in our country often live in cold, draughty homes, many rent from private landlords whose properties are below decent standards.
“That is a Tory legacy and scandal. This government will not tolerate this injustice and we will end it. Decent energy standards for private rented homes that will mean warmer homes and lower bills for renters.”
However, many in the industry have cautioned that, while improving the energy efficiency of rental homes is something that should be done, the path to achieving this must be done with the sector in mind in order for it to be achievable.
Timothy Douglas, Head of Policy and Campaigns at Propertymark said: “Property agents want to see more energy-efficient homes, but new rules and requirements must be realistic and achievable.
“Furthermore, without providing landlords with incentives and access to sustained funding, it is unlikely that energy efficiency targets for the private rented sector and a reduction in emissions across the property sector will be met.
“The consultation process must shine a light on the different types of property across the rented sector to ensure the targets, guidance and funding prioritise the most difficult to decarbonise.”
More information is needed
Chris Norris, policy director for the National Residential Landlords Association (NRLA), echoes the need for more information from the government for landlords.
He said: “The NRLA wants to see all rented properties become as energy efficient as possible. However, the government’s approach must involve a clear and comprehensive plan which recognises that the sector has some of the oldest, and hardest to improve, properties in the UK’s housing stock.
“The sector needs a clear trajectory setting out what will be expected of it and by when. This plan must also ensure sufficient numbers of tradespeople are in place to undertake the work that will be required.
“Alongside this, as the Committee on Fuel Poverty has warned, is the need for a financial package to support investment in energy efficiency measures. At present, the private rented sector is the only housing tenure without a bespoke package to support work to upgrade homes.”
