Handed down to the UK through the catchy-named European Union Directive 2002/91/EC, Energy Performance Certificates have been the cause of many a headache for landlords since their introduction through the infamous Home Information Packs in 2007.
In 2012 we saw the tightening on regulations mandating EPCs for the private rented sector, and just last year more regulations come into force forbidding Section 21 re-possessions if tenants had not received a valid EPC.
The Minimum Energy Efficiency Standards for the PRS are set to come into force in 2018, and by 2020 landlords will not be allowed to let out property with an EPC rating of F or G (exemptions apply). Tenants already have the right to request energy efficiency improvements.
But now with Brexit on the horizon, the scrapping of the Department for Energy & Climate Change, and a new PM in Number 10, are EPCs finally on the way out?
Unfortunately it seems that the new Government has no plans to change the agenda. (Sorry for the click-bait headline).
So where now for PRS energy efficiency?
The energy efficiency of properties in the sector is far below those in the social or owner-occupier sectors. This can at least in part be attributed to the make-up of the sector, with 30% of PRS properties having been built pre-1919 – a far higher portion than in other tenures.
But even though the Green Deal failed, EPCs are unreliable, and the majority of tenants do not care about it when looking at properties, energy efficiency has continually improved in PRS stock over the past decade.
As a Parliamentary committee just reported, the Government needs to improve upon its so-far “blinkered” approach to energy efficiency. The minimum standards that are set to be introduced in 2018 will stop landlords from letting energy inefficiency properties. However there is an exemption that landlords will not need to cover any upfront costs. With the failure and close of Green Deal financing the policy effectively neuters itself.
To actually achieve anything, the Government seem to have two realistic options:
- Pause the minimum standards set to be introduced in 2018, until a time that funding is actually available through a (thought-through and improved) successor to the Green Deal
- Scrap entirely or relax the no-upfront-cost exemption so landlords will have to fork-out for necessary improvements.
The NLA obviously favours the first option, and has been continually lobbying on this position (even recently including it as part of our evidence to the Public Accounts Committee inquiry into the Green Deal). While there are other funding streams, such as the Energy Company Obligation (ECO), these have strict eligibility criteria and are harder for landlords and tenants to access.
With the imminent restrictions of mortgage interest relief, additional SDLT rates, the imposition of Right-to-Rent checks and more regulations set to be introduced from the Housing & Planning Act 2016, imposing extra financial burdens on landlords would be detrimental to the PRS, low-cost housing and affordable accommodation at the moment.
A new Government, with new Ministers, means new opportunities to set out the benefits of the PRS and we are impressing upon them the need to keep costs down for landlords.
We will be doing the same for energy efficiency measures to make sure that landlords get a good deal, and are not being punished for providing housing to meet the growing demand.