Ministers want to know what landlords think about lifting the minimum energy efficiency ratings for private rented homes.
The plan is to raise the minimum Energy Performance Certificate (EPC) rating from E to C for new tenancies from 2025 and all other tenancies by 2028.
New tenancies include renewing letting agreements for existing tenants.
A consultation document released by the Ministry of Housing, Communities and Local Government reveals most private rented homes fall into the EPC ranking of D, E or F.
In total, 3.2 million of around 4.5 million private rented homes in England and Wales fall into EPC category D or below.
The paper also points out that double the number of private rented homes are classed fuel poor compared with owner-occupied homes or social housing.
- 1 Private rented homes by EPC rating
- 2 Aim of the warmer homes policy
- 3 Funding warm home improvements
- 4 Non-compliance fines to rise
- 5 Responding to the consultation
- 6 EPC law change timetable
- 7 EPC consultation FAQ
Private rented homes by EPC rating
|Energy Efficiency Rating||Not fuel poor||Fuel poor|
Source: Ministry of Housing
The data shows 8% of owner occupied properties and 9% of social housing are fuel poor with the figure rising to 18% for private rented homes.
Aim of the warmer homes policy
The consultation paper explains this means private renters are paying more to heat their homes and hot water, while generating higher carbon dioxide emissions.
Investment in better energy efficiency would make rented homes warmer and more comfortable, reduce bills and emissions.
EPC C-rated homes cost around £300 less a year to heat D-rated properties, and around £740 less E-rated homes.
“As well as reducing emissions from homes, energy performance is an investment in health and wellbeing, as it means living in warmer, more comfortable homes, which brings with it associated benefits such as better air quality and improved comfort. In the long-term, improvements in energy performance and heating translate into attainment benefits, such as increased productivity, longevity, and higher life satisfaction,” says the report.
“Landlords who make energy performance improvements benefit from increased rental income and reduced void periods, whilst seeing increases to the value, quality and desirability of their assets.”
Current regulations ban private landlords from renting out homes rated F or G on an EPC unless improving energy efficiency is impossible or too costly.
Funding warm home improvements
Ministers feel landlords should share the cost of improvements. The average cost of bringing a property up to EPC C-rating is around £4,700.
“The average per-property spend under this cost cap is £4,700. If we introduce the compliance dates of 2025 and 2028, landlords will have up to seven years to plan and save for the works. In addition, the development of a green home finance market would help landlords borrow money against the value of their assets in order to fund the energy performance improvements,” says the report.
The consultation highlights three schemes to help private landlords fund energy efficiency improvements:
- Energy Company Obligation (ECO3) – Low rated homes (E, F and G) qualify for renewable heating, solid wall insulation and first time central heating under the scheme, while homes rated E and above can benefit from lower cost measures
- Green Deal – Funding that lets landlords borrow cash for improvements that is paid back through energy bill savings. The scheme has had little uptake and closed in 2015, although some loans are still available
- Green Homes Grant – The latest energy efficiency scheme launched in September 2020. Grants will fund up to two thirds of the cost of energy efficiency improvements to maximum £5,000
Non-compliance fines to rise
Among the proposals listed in the consultation is a call to raise fines for non-compliance with EPC legislation to £30,000 a property for each breach of the rules. The current maximum fine is £5,000.
Responding to the consultation
The consultation closes on December 30, 2020.
Due to COVID-19, paper responses will not be accepted.
EPC law change timetable
The Ministry of Housing expects to publish responses to the consultation in Spring 2021, followed by new regulations to amend the current rules in April 2021.
EPC consultation FAQ
Making private rented homes more energy efficient is a key policy for the government.
Warmer homes foster a better sense of wellbeing, cost less to heat and reduce the UK’s carbon emissions, suggests the latest EPC consultation.
For landlords, the proposals mean forking out for work on property for others to benefit from.
What’s the government’s preferred policy?
The consultation outlines four key policy initiatives:
- Raising EPC ratings for private rented homes to C
- Phasing in any improvements over five to seven years
- Increasing the landlord maximum investment to £4,700 a property
- Installing fabric first improvements – which means improving the building rather than mechanical or electric systems
What is an Energy Performance Certificate?
The Energy Performance Certificate or EPC is a list of ratings about the energy efficiency of a home and any improvements that could raise the standard.
The highest ranking is A and the lowest G. Any private rented home falling into the F or G ranking must not be let to a tenant.
What happens if energy efficiency improvements cost too much?
Landlords must pay the cost of any improvements up to £3,500 if alternative funding is unavailable. The consultation suggests this should rise to £4,700 from 2025.
Not complying could mean spending £3,500 on the property plus a maximum fine of £5,000. This will rise to £4,700 on improvements and a maximum £30,000 fine from April 2025.
Will the government listen to my consultation response?
The idea of a consultation is to listen to opinions and ideas from anyone with an interest.
That includes individual landlords who have no other real voice in government.
Many individuals frame consultation responses which are read and published together with other responses by the government.
A date to amend the law is already set – is this a waste of time?
Consultations are rarely open-ended otherwise there would be no deadline to work to.