What next for energy efficiency in the PRS?
With plans that would see landlords pay up to £10,000 per property for energy efficiency improvements now axed by the Prime Minister, what can we expect to see next?
Founder and Managing Director of Safe2 James Kent, now part of the NRLA, shares his thoughts on what the future holds.
Last week saw the surprise news that the Government’s plans to implement stringent new energy efficiency rules in the PRS have been dropped, but what does this actually mean?
The Government first mooted plans to introduce a minimum Energy Performance Certificate (EPC) rating of C for privately rented homes back in 2020, with a consultation on the proposals ending more than two years ago.
Since then landlords had been left in limbo, with the proposed 2025 deadline looming large on the horizon, as the NRLA flagged serious concerns on issues including funding for improvement works and tight timescales.
And it seems the Government has listened to those concerns.
Ambition
Let us be clear, the over-riding ambition is a good one. Improving the energy efficiency of homes makes them greener and cheaper to run, benefitting landlords and tenants.
However the proposals as they were laid out were demanding too much of landlords, not least in the middle of a cost-of-living crisis.
Unfortunately, as my colleague Ben Beadle, NRLA’s Chief Executive, outlined on BBC Newsnight last week, for some the damage has already been done.
Bills of up to £10,000 per property for energy improvement works were the last straw for some landlords who have cut their losses and sold up. The Government u-turn is cold comfort to them – and the tenants they were housing who have lost their homes.
Other landlords, hoping to stay ahead of the game have already shelled out for improvement works.
In a statement issued on gov.uk the Government said it would, 'scrap policies to force landlords to upgrade the energy efficiency of their properties, but instead continue to encourage households to do so where they can'.
However it is likely there will be a replacement scheme mooted at some point, regardless of who triumphs at the next election. Ed Miliband, Labour’s shadow secretary for climate change, has already said he is ‘in favour’ of requiring rented properties to meet a minimum EPC C rating.
Whatever any future plans include, it is vital that the private sector is given support to fund any improvement works, and that landlords are kept in the loop when it comes to the Government's direction of travel.
Without this it is impossible to make investment decisions.
My colleagues at the NRLA have repeatedly stressed the risks of a one-size-fits all approach to finance across the country and the importance of tax breaks to facilitate improvements and we will continue to campaign on this going forward.
Ten thousand pounds is a lot of money in anyone’s book, but it’s clear it would have a much bigger impact on the business of landlords with homes in poorer areas of the north that it would on those with high value properties in central London who can command much higher rents.
We would ask that any future scheme takes this into account.
Ministers now need to use the space they are creating to develop a full plan that supports the rental market to make the energy efficiency improvements we all want to see.
This must include appropriate financial support and reform of the tax system which currently fails to support investment in energy efficiency measures.
Is there anything I should do in the meantime?
Energy efficient homes are better for everyone. They minimise energy usage and therefore costs, making them more attractive for tenants.
Making homes as energy efficient as possible will help prepare them for low-carbon heating systems, such as heat pumps. Gas boilers are still planned to be phased out in 80 percent of homes by 2035 and the Government will be increasing the Boiler Upgrade Grant to install low-carbon alternatives to £7,500.
Many landlords are already improving the energy efficiency of their properties, when they are able to do so.
Turnover of tenants or void periods are useful opportunities to upgrade, and landlords can check whether they or their tenants are eligible for support through the Great British Insulation Scheme (GBIS) or local funding schemes.
More information
- The requirement for a valid EPC is very much still in force. You can arrange an EPC, alongside other safety certificates via Safe2. Find out more here.
- For more information on the NRLA’s campaign on energy efficiency, including its key asks of Government click here.
- The NRLA runs an energy efficiency course for landlords keen to find out more about improving the performance of their rental properties. For more information click here.
