Energy efficiency: let's see more carrot and less stick
Energy efficiency of rented homes
This week the Government has outlined new proposals to increase the energy efficiency of rented homes. The plans are set out in a consultation document produced by the Department of Business, Energy and Industrial Strategy and it is asking for comments by the end of December.
Key objectives are to:
- Deliver significant emissions reductions
- Decrease bills for low income and vulnerable tenants, in support of the Government’s statutory fuel poverty target;
- Reduce energy bills and ensure warmer homes
- Support investment in the domestic retrofit supply chain
- Increase energy security as a result of lower demand on the grid and reduced fuel imports.
The intention is to improve the energy efficiency of the rented housing stock, while at the same time increasing both the quality of homes in the PRS and boosting property values for investors. This will be achieved via a four-point plan that involves:
- Raising the energy performance standard to Energy Performance Certificate energy efficiency rating Band C;
- Achieving the improvements for new tenancies from 2025 and all tenancies from 2028
- Increasing the maximum investment amount, resulting in an average per-property spend of £4,700 under a £10,000 cap;
- Introducing a ‘fabric first’ approach to energy performance improvements, ie upgrading the performance of the materials that make up the building fabric itself, before considering the use of mechanical systems.
“quality, value and desirability” of homes
The consultation document runs to almost 50 pages but it is worth reading in full because there are some serious implications for landlords. The Government’s aim to use these proposals to increase the “quality, value and desirability” of homes in the PRS is one we can all support. But achieving this has a cost attached. Grants and subsidies to carry out improvements are available in some cases but ultimately it is landlords who will have to put their hands in their pockets. And as Landlord Today comments “measures to enforce the new regulations may ultimately involve agents and portals being ordered only to advertise those rental properties that conform with the energy efficiency targets”.
PRS is becoming more important than ever
The devil is always in the detail. So before commenting on these proposals it is worth reading the small print carefully. In future tenants will be able to request that energy improvements are made to the property they rent. Landlords will be fined if they don’t comply. The regulatory landscape is shifting under landlords’ feet once again – at a time when the PRS is more important than ever. Of course energy efficiency is vital if we are to tackle climate change and provide decent, affordable homes for tenants. But more carrot and less stick might be a better way to get landlords on board.
You can read the consultation in full here, and responses must be submitted by 11.45pm on 30 December.
Under Offer: This term applies to a property where the landlord is considering an offer but remains on the market. It implies that further offers may still be considered until the landlord formally accepts or declines the current offer.
Let Agreed: This term indicates that a landlord has provisionally agreed to enter into a rental agreement with a prospective tenant, pending additional checks and referencing. It doesn't require the prospective tenant to have paid a holding deposit.
Let: This term signifies an established binding rental agreement between the landlord and tenant.
For both lettings and sales, the guidance addresses additional terms:
New On The Market: This term is used for a property not advertised since its last sale or rental. It should only be used for a brief period.
New Instruction: It applies to a property assigned to an agent for marketing recently, even if it was previously listed with another agent without being sold or rented.
New and Exclusive: This term refers to a property that is either new on the market or a new instruction, exclusively available through a specific agent or portal.
New Method of Sale/Let: This term is used when a property is being marketed for sale or rent using an alternative approach to the original advertisement, such as transitioning to an auction or sealed bid.
Reduced: This term indicates that a property's price has recently been reduced. The reduction should be genuine and comply with the Chartered Trading Standards Institute's guidelines on pricing practices.