As the Covid-19 pandemic dominates our lives it’s difficult to look beyond the immediate future. But life and lettings go on including the government’s recent unveiling of dramatic energy efficiency targets for landlords. 

Plans to raise minimum energy efficiency standards for rental homes were revealed last month, to coincide with the launch of the government’s new Green Grants scheme. 

As of this year all rental properties (other than those with valid exemptions) must have an EPC rating of E or higher to be legally rented out. 

The government now plans to raise this level to C – or higher – from April 2025 for new tenancies and from 2028 for existing tenancies.  

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The plans include a cost cap of £10,000 per property and a £30,000 fine for non-compliance. 

As a landlord myself I understand the need for improvements across the sector – and the benefits that come from energy efficient homes for landlords, in that they are more attractive to potential tenants, and renters as they mean cheaper bills. 

Older homes 

Landlords are already making improvements. The latest English Housing Survey figures show the number of rental homes with an energy-efficiency rating band of A–C has increased over the 10 years to 2018 from 11.6% to 32.6%. 

But there will be challenges for many, particularly those with older properties particularly pre-1919 homes, or those that are off-grid, or in areas where the cost of upgrades is disproportionate to property values. 

According the English Housing Survey 33% of homes in the PRS were built before 1919 so are likely to have solid walls, making insulation much more difficult. Listed status can also affect landlords’ abilities to make changes. 

More broadly, there is also the issue of ‘moving goalposts’. If the government wants to go ahead with this plan, and make no mistake, it is committed to this direction of travel, there needs to be clear, long-term proposals for the trajectory of change along with a package of funding to support landlords. 

This will help us to plan changes and improvements to our properties over the next 10 -15 years and how to fund them. 

The Government is looking to move to ‘low carbon-heat ready’ in the private rented sector by 2030, which means making as many changes to the fabric of buildings as is possible in anticipation of the phasing out of gas boilers, as has already been announced for new-build homes. 

In all the Government has committed £9.2 billion in its manifesto to energy efficiency measures and we will continue our ongoing campaign to ensure a share of that is used towards support for the private rented sector. 

My colleagues in our policy department are now working on our response to the consultation, which closes on December 30. 

This means it is unlikely any new laws will be passed until next March at the earliest. 

Green Homes Grants  

The Green Homes Grants are the first move by the Government to incentivise energy efficiency improvements in rental homes. 

Through the scheme the Government will provide vouchers that will cover up to two thirds (67%) of the cost of qualifying improvements up to £5,000.   

Split into primary and secondary, you must qualify for primary measures before you can apply for secondary measures and the installer will receive payment from the government for the costs covered by the voucher.  

But if you want to take advantage of this funding – which is available in England only – you will need to move fast. 

Not only is the time period set by Government tight – ending on March 31, 2021 – by which time work needs to be completed – there are could also additional issues finding accredited tradespeople people to do the work, with more and more areas entering Tier 2 and 3 coronavirus measures, meaning greater restrictions. 

The system may seem confusing – but it is not often government cash is made available in this way and it is worth remembering that although there is a cost to you as a landlord the improvements will still need to be made at some point when the funding is gone. 

For help in navigating the process our website now includes a step-by-step guide to accessing the grants for members. We also held a webinar on the issue, which can be accessed by members here.  

We will be holding a second webinar on the issue on December 9. To register keep an eye on our webinar pages here. 

7 COMMENTS

  1. “As a landlord myself I understand the need for improvements across the sector – and the benefits that come from energy efficient homes for landlords, in that they are more attractive to potential tenants, and renters as they mean cheaper bills. ” ……. but a higher rent to reflect the more attractive and energy saving property, and the landlord’s financial outlay . Or did you think landlords were going to fork out for the primary upgrades without looking for an increase in rent to recoup the outlay?

    The local landlords I’ve spoken to think the upgrades listed as secondary are needed more urgently than those listed as primary.

  2. I think the real agenda here is to boost the large cap house building companies. Older houses are not going to be worth the hassle for landlords to own. Much easier to buy the new build properties that tick all the boxes. Help to buy has already boosted supply of new builds. The house builders realise this and need to get older houses demolished to keep their business going forward.

    Sooner or later the often repeated mantra of “we aren’t building enough houses” is going to be called into question. I think there’s probably already an over supply of properties.

  3. Although the Govt wants to phase out gas, EPCs slam any property without GCH – contradictory policies.

    7 of my 11 properties will cost too much to get to a C to be worthwhile – these are either modern houses with no gas supply or Victorian terraces, which need expensive wall &/or floorl insulation to achieve a C even with GCH, so I will sell them.

    Trying to get a Green Homes Grant is impossible as the Govt have decimated the sector and those left in are overwhelmed with demand.

    In short, the only properties that can easily achieve a C are modern boxes, which cost more to buy and more to rent, so tenants will pay more and have less choice and the older, larger, more characterful properties will go back to the owner/occupier sector with no improvements in their EPCs. So there maybe large scale changes in the PRS but not in the energy efficiency of the housing stock.

    The unintended consequences of this policy will be fewer PRS properties, less choice for tenants and higher rents.

    • I agree with a lot of your comments, but I wouldn’t assume these changes will result in higher rent levels. It depends how many new properties are built. The government has been pumping money into the new build sector, subsidizing buyers with H2B, increasing sales prices for the new build houses. This is resulting in increased supply of new builds.

      I agree the older houses are likely to revert to being mainly owner occupied; but if those owner occupiers would otherwise have been tenants, then net demand for rental properties has not increased.

      For the owner occupiers buying the Victorian terraced houses, they will be hoping to buy at lower price levels, in order to offset their likely higher heating bills (compared to their peers in the new build houses).

    • What’s the planned alternative to gas supply to individual houses?
      Communal hot water supply?
      I know a few places where that is the standard.

      Not sure it’s more energy efficient though. I’m sure the hot water loses heat (energy) during its journey to the individual houses. Gas is probably much more efficient to distribute than hot water.

      Probably much safer though. A lot of idiots should not be trusted with an individual gas supply.

  4. It is no business of the government what type of heating or insulation is available in a rented home. That is a simple matter, to be discussed between the landlord and tenant at the time of agreeing the rent. If a tenant becomes unhappy with the standard of insulation then after six months they can leave the property.

    This is pure discrimination against landlords. -Owner occupiers can sell a property with whatever EPC grade they choose.

    What people in the UK fail to understand is why our GDP growth is so low. Here is a perfect example. Over-regulation in so many, many sectors. Who would become a landlord these days with over 100 pieces of legislation to deal with? And the same in so many sectors. We never see the loss from businesses not started.

    • Totally agree.
      Some tenants may prefer to rent a house with less insulation, if it means the rent is lower. Some people don’t care about heating that much. For example people who are active in their houses or not at home much.

      I know a guy who sells online from home. He’s constantly moving boxes around and packaging stuff. Only has the heating on for an hour before bed.

      Regulation is strangling so many businesses in the UK.
      The one sector that seems free to do as it wants is technology / social media. Just look at who they employ to lobby for them. The revolving door in action.

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