What is next for energy efficiency in the private rented sector?
With the Green Homes Grant scheme scrapped early, landlords have been left asking what next for energy efficiency in the sector as deadlines for ambitious targets loom ever closer.
The Government has committed to green energy and decarbonising the energy sector to reach net-zero emissions by 2050. However, according to the Climate Change Committee and the EAC, this target will not be met unless urgent and immediate action is taken to improve the energy efficiency of properties this decade.
Under the MEES consultation, the government is proposing to increase the minimum EPC rating to C for new private rented sector tenancies from 2025 and existing tenancies from 2028. At present 19 million UK properties need energy efficiency upgrades to meet EPC C.
Workable solutions are needed
The NRLA has undertaken research alongside TDS and put together a briefing document for government with recommendations for workable solutions that will help the government meet its ambitious targets.
The research confirmed landlords have significant interest in energy efficiency investments with over 80% of landlords having made or planning to make energy efficiency investments. This confirmed NRLA assertions that private landlords have already taken significant actions to improve the energy efficiency of the PRS over recent years.
According to our research, those landlords who have previously engaged with energy efficiency programmes have mainly carried out relatively low-cost intervention, such as loft and cavity wall insulation.
To meet more ambitious long-term targets of EPC C and above and decarbonisation, more expensive measures need to be undertaken, such as low-carbon heating and external wall insulation. These carry both impractically high costs for many landlords and significantly disrupt tenants’ enjoyment of their homes – as the works will need to be done when the property is vacant.
These barriers risk hindering progress towards meeting the Government’s targets and make many landlords question the viability of their investments.
To drive forward energy efficiency in the private rented sector, the NRLA is calling on the Government to:
Maximise eligibility. Previous schemes, like the Green Homes Grant, have lowered take-up by only allowing works to be carried out by certain contractors who are often in short supply, and by effectively limiting access to the grants to those landlords who have not previously carried out works.
Reduce costs through tax changes. The installation of energy efficient upgrades counts as capital expenditure. Instead, this spending should be deducted from revenue as an expense on an annual basis, reducing short-term costs to landlords. Additionally, we are calling for a new Landlord’s Energy Saving Allowance (LESA) and finance schemes.
Target specific improvements. A simple funding scheme to replace the poorest performing windows and heating systems, and improve insulation – targeting the areas landlords with poor performing properties need assistance with.
The paper makes the case for a holistic, and long-term approach to greening the private rented sector (PRS).
As part of our broader energy efficiency campaign work, we continue to work with both the UK Department for Business, Energy and Industrial Strategy (BEIS) and the Welsh Government on energy efficiency and carbon reduction policy. Looking forward, we will also be working with external partners on research to address the challenges of decarbonising homes in harder to reach areas, with older properties and less availability of finance options.
For more information on the NRLA’s energy efficiency campaign work, visit our webpages.