There is a trend in the UK for more and more people to rent their homes, many from private landlords. Too often, these are cold, energy inefficient homes: over 280,000 homes in cities across the UK that do not meet minimum energy efficient standards.
However, this is soon set to change due to legislation that kicked in at the start of this April. The minimum energy efficiency standards (MEES) will require homes in the Private Rented Sector (PRS) to meet a minimum energy efficiency standard. This is good news for the hundreds of thousands of tenants, who have little or no choice but to live in cold homes.
It’s not all plain sailing, however. The regulations are currently too focused on the interests of landlords, who are able to exempt their properties from the regulations where improvements would mean an up-front cost. Instead, the regulations should be based on minimising the number of households living in substandard conditions – and the contribution that this policy can make to meeting fuel poverty targets.
The government recently consulted on changing the MEES regulations, with any changes coming into force in April 2019, and introduced the concept of a ‘cost cap’: if the improvements required cost any less than that cap, landlords would be expected to fund improvements. The consultation recommended that such a cap should be set at £2,500.
Yet this will result in less than half of the 280,000 worst properties (those with EPC ratings of F or G) receiving some form of energy saving improvement. In comparison, a cost cap of £5,000 would result in 93 per cent of F and G rated properties being improved. Using the lower cap, alongside the ability for landlords to apply for exemptions, weakens the huge potential that these standards could deliver.
Some cities are moving to deliver retrofit programmes to improve the energy performance of homes in the PRS, and support the expansion of the energy efficiency industry to maximise activity across all tenures. The Greater Manchester Combined Authority’s (GMCA) Little Bill Programme was the largest Green Deal Communities Programme in England. The scheme, which was targeted at owner-occupied and privately rented homes, worked with over 1,200 households: residents saved, on average, £350 per year on their energy bills.
A call to action
The size of the private rented sector has increased by over 40 per cent in the last ten years, with these properties now accounting for a fifth of housing stock in England. It is widely accepted that this tenure will continue to expand.
And the result? Households living in the PRS have the highest prevalence of fuel poverty: 21.3 per cent compared to 7.4 per cent in the owner occupier sector. This rises to a staggering 45.7 per cent when focusing on F and G rated PRS properties.
Research highlights that cold related illnesses from privately rented F and G properties costs the NHS £35m per year, an estimate I would say is on the conservative side. (This study is based on BRE’s HHSRS cost calculator, which has since been updated, the PRS sector has grown and the English Housing Survey’s (EHS) latest statistics have shown that there has been a reduction in some hazards.)
Inaction to improve the energy performance of privately rented homes will leave thousands of tenants paying higher energy bills for years to come. Average annual energy savings from the government’s preferred cost cap of £2,500 would save a tenant £95 per year. The £5,000 cost cap option could save tenants £188 each year on average.
Increasing the energy efficiency of privately rented properties is therefore key to supporting fuel poverty and carbon reduction targets. However, achieving this in the private rented sector has historically been challenging. It has long been recognised that minimum standards are key to achieving improvements in this sector.
A step-change in the implementation and enforcement of regulations and energy efficiency delivery is needed. This will establish a clear route map for upgrades, giving landlords and industry the confidence to plan ahead and invest for the future.
Investing in the energy performance of PRS properties can boost economic growth, reduce carbon emissions and support action to eradicate fuel poverty. The rewards of stepping up activity in this area are too good to miss.
Kelly Greer is research director at the Association for the Conservation of Energy (ACE).