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A long road to upgrading private rented homes

ImageBy 2018, private sector landlords will not be allowed to let out an F- or G-rated building. Why do we have to wait that long for change?

Everybody else seems to be quoting Charles Dickens in his bicentenary year. So let me do so, by borrowing that “best of times, worst of times, age of wisdom, age of foolishness” paradox in the opening paragraph of A Tale of Two Cities.

The private rented sector offers the best examples of energy-efficient homes. The private rented sector includes some of the worst examples of dreadful, profligate, energy inefficient homes.

Increasingly the private rented sector matters. Since the millennium, there has been an inexorable rise in the proportion of households paying rent to a private landlord. Almost 1 in 6 households now do so.

Some live in excellent, often upmarket, new buy-to-let properties that are A rated on the Energy Performance Certificate scale. But sadly that is not the majority. The private rented sector also has the highest proportion (28 per cent) of the very worst energy performing properties, band G. It is therefore far from surprising that Consumer Focus reckon that as many as 28.4 per cent of private rented sector tenants are in fuel poverty today.

Half in fuel poverty

Back in 2009 government research revealed that not only were there over 680,000 F- or G-rated private rented sector properties, but that approaching half of these were occupied by those in fuel poverty. Given the exponential rise of the absolute numbers in fuel poverty, I suspect that proportion will have grown in the interim.

Last year the government legislated. By 2018, landlords will simply not be permitted to let out to anybody an F- or G-rated building. Whoever is then Secretary of State must, by law, implement this requirement.

Or at any rate, that was what the set piece Parliamentary speeches, and the Departmental press releases stated. I am sure that is precisely what strategically the Government wishes to occur. Sadly the small print is turning out to include some potentially worrying ifs and buts.

For a start, if the problem has been clearly identified, why are we waiting until 2018 for action? Unlike the commercial sector, most residential tenures, certainly most leases, can be measured in months, not years. Over half such properties have new tenants every two years. The familiar split incentive, between who pays the fuel bills and who funds/organises any energy improvements, is thus exacerbated.

Statistically, the average rented home could well be on to its fourth set of tenants before the new requirement, enacted in 2011, starts operating seriously. This seems peculiarly perverse, as statutorily under the Warm Homes Act 2000, the government is obliged to have removed all vulnerable households from fuel poverty by 2016 – two years before this “outlaw F and G ratings” law kicks in.

Granted, that from 2016, a well-informed tenant can request that energy improvements be made, and expect satisfaction.

However given how few landlords (just 0.2 per cent) have made use of their existing tax break, the Landlords Energy Saving Allowance with (to be fair) its unnecessarily restrictive requirements, many will be looking to the Green Deal finance mechanism for help.

At least sensible landlords will. Just as there are some ghastly tenants, sadly not all sensible tenants are blessed with reasonable landlords.

In its Energy Act impact assessment, the government acknowledges that even “longer term tenants, who have an incentive to request measures, may not want to risk losing their tenancy by confronting the landlord, especially in the cast that a tribunal is required.” A recent paper published by Wyre Forest DC states that “officers estimate that as many as 50 per cent of housing complaints result in retaliatory evictions.”

The daft aspect is that ever since the Housing Act 2004, its Housing Health & Rating System has given local authorities strong powers for ensuring improvement of any properties containing health hazards. And a Category One such health hazard is definitely “excess cold”.

I am not alone in my disappointment that too few councils seem to be fulfilling their duties under Section 3 of this Act. Back in 2009 the DEFRA Select Committee stated very firmly that this duty was “not being pursued as vigorously as it could be”, and asked government to “urgently review” the extent to which this could be tightened up. There has been no very obvious response. There needs to be.

The chairman of the Green Investment Bank is Sir Adrian Montague. He is also overseeing a significant part of the Government’s Housing Strategy review. He has issued a call for evidence during this month, asking how to encourage greater investment in privately rented properties “to boost investment in rental properties, helping support the rapid growth of the private rented sector” by increasing the supply of affordable homes.

I have no concerns about the energy standards of new build affordable homes. But despite the government’s commitment to outlaw the leasing of F and G rated homes, it is still a case of too slow, and not really ambitious enough. If you want to guarantee a household will never slip back into fuel poverty, it is really a C, not an E, energy rating that will be required.

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