Energy Efficiency Standard for Social Housing post-2020 (EESSH2): consultation analysis

Minimum Standard and Exemptions

The EESSH 2020 milestone sets a minimum energy efficiency rating for all social housing, depending on the type of property and the fuel used to heat it, which falls within EPC bands D-C. The majority of social housing will meet this.

It is proposed that a minimum standard of EPC D would apply from April 2025 and that social housing that cannot be brought up to EPC D by April 2025, and is not subject to temporary exemptions, should not be let to social tenants.

There are constraints on the ability of landlords to bring all properties up to the new standard for 2032. However, the Scottish Government considers it appropriate to frame the standard in terms of maximising attainment rather than achieving the standard for all properties in the sector and that a procedure for exemptions is not required. However, landlords would need to provide a short narrative explanation of their performance in their annual returns to the SHR.

Views on the proposed minimum standard that no social housing should have an energy efficiency rating of less than EPC D

Question 6 - What are your views on the proposed minimum standard that no social housing should have an energy efficiency rating of less than EPC D?

A majority of respondents noted their agreement with the proposed minimum standard that no social housing should have an energy efficiency rating of less than EPC D:

If we are to remove poor energy efficient housing as a driver for fuel poverty and continue to promote the social housing sector as a key housing resource in Scotland, then it is welcomed that a minimum standard could assist with this.
Local Authority respondent

Reasons given were that it is:

• Achievable and realistic, especially since most stock has already reached this standard. However, the proposal also acknowledges that some properties, such as non-traditional builds, will struggle to achieve EPC D.
• Important in protecting tenants from high energy costs and preventing fuel poverty.

There were other views as to what any minimum standard should look like. These generally focused on the exemptions:

• The provisions for granting abeyances and time-limited exemptions where works are currently not technically feasible, or cost effective, should be maintained.
• Temporary exemptions should include installing technically complex technology.

Suggestions for how landlords could be supported to ensure all their stock meets the standard were:

• Providing clear guidance on the criteria for all the different EPC ratings. Specifically, clearly defining the exemptions and the criteria for applying the minimum standard, especially for traditional, historic and listed buildings.
• Providing further advice and information on the innovative technologies that can assist landlords in bringing hard-to-treat properties up to the standard.
• Providing subsidy or grant support for further works if all reasonable measures have been applied and a property still does not meet the standard.
• Landlords should only be required to upgrade a property to the minimum standard when an opportunity arises, such as if the property becomes vacant.

It was also suggested that proper enforcement will be required and that this will need to be resourced.

A small number of Housing Association and Local Authority respondents did not agree with introducing the proposed minimum standard, although some stated their agreement with the principle of having a minimum standard. Concerns tended to centre on whether landlords would have to demolish or sell stock that did not meet the standard. Further comments were that:

• It simply may not be financially viable, or even possible, to bring properties up to EPC D standard. As noted at earlier questions, property type and location will play a role. Listed buildings, historic properties and properties in conservation areas will bring particular challenges.
• A building may be unable to achieve an EPC D and yet have 200 years of use left. To potentially remove this stock from social housing use due to its EPC rating is a flawed strategy from both a financial and carbon perspective.
• Disposal seems particularly unreasonable if the landlord has not been able to make the necessary improvements, for example because properties are in a mixed tenure block and owners will not agree to the works or tenants will not permit access.
• If properties are left empty their condition may suffer and landlords will lose revenue.

Other comments were that selling social housing stock will not help in meeting national targets or in maintaining socially-rented supply. One Housing Association respondent reported that:

We could potentially lose approximately 500 houses from our stock. It is likely that these houses will be in the most remote locations in fragile economies so the impact on local communities could be potentially disastrous.
Housing Association respondent

Other respondents raised similar concerns about the loss of off-gas grid and detached properties in rural areas.

Whether supporting the proposal or not, respondents highlighted some of the possible impacts that removing properties from the stock will have, including on tenants and local communities. For example:

• Tenants having to leave their community if their landlord cannot offer alternative accommodation nearby.
• Tenants finding themselves homeless if alternative properties are not available.
• Negative impact on the local economy and community cohesion, with increased numbers of vacant buildings.

In response to these concerns, it was felt that there must be provision via the affordable housing supply programme beyond 2021 for replacement of social housing that will no longer be available for social rent because it cannot meet the proposed minimum standard.

To avoid exacerbating the shortage of social housing, capping rent chargeable if a property is below minimum standard was proposed. However, the Housing Association respondent raising this issue did note that improving the property's energy efficiency to minimum standard should always be the preferred option.

Finally, an energy-related private sector respondent felt that the EPC D target is not high enough, and that EPC C is more appropriate. The minimum EPC D standard was not seen as aspirational nor focusing on the right issue. A stronger strategic policy connection between the proposed minimum standard and the recently published Fuel Poverty Strategy and accompanying Fuel Poverty (Scotland) Bill is required. Further, it was thought that:

…more emphasis needs to be placed on the whole house cost of energy, rather than a sector wide postponement of improvements to allow a catch up with a minimum standard that 0.5% of social housing properties are allowed a further 5 years to achieve.
Housing Association respondent

Proposal that the minimum standard of EPC D applies to social housing from April 2025

Question 7 - It is proposed that this minimum standard of EPC D applies to social housing from April 2025, in line with the standard for the private rented sector. What are your views on this timescale for social housing?

Some respondents gave their agreement with the proposal for a minimum standard of EPC D applying to social housing from April 2025, commenting that the standard is achievable, and that is important and appropriate for the social rented sector to meet or exceed, standards for the private rented sector:

We are supportive of the proposed minimum standard in particular that there is the same standard regardless of tenure.
Local Authority respondent

Others offered support provided certain conditions are met. Most frequently, these respondents sought assurance that reasonable exceptions would remain in place. Other comments were that the minimum standard is only reasonable under the following conditions:

• Technology has been developed that makes the necessary improvements cost effective.
• Supply chain to deliver improvements is in place. Sufficient support and awareness raising will be needed to ensure there is a supply chain in place which can deliver the minimum standard.
• Funding is in place.

Further comments on funding were that it should be made available to demolish and rebuild and that:

Equal funding streams for PRS and RSLs should be made available concurrently to ensure that one landlord does not 'block' the other when it comes to common investment schemes.
Housing Association respondent

Other ways in which respondents thought social landlords could be supported to meet the minimum standard were:

• Providing advice on how to handle tenant consultation and on enforcement powers to keep within the guiding standards.
• Each organisation should develop an asset investment strategy.

As per the previous question, there were concerns that not all properties will comply because of factors such as owners preventing works progressing in blocks of flats, and limitations to permissible improvements in conservation areas. Given these restrictions, it was thought that:

…it is difficult to see any meaningful benefit from setting the Band D target in 2025.
Local Authority respondent

In contrast, others raised similar concerns as per Question 6 about properties being lost in the social rented sector:

Consideration must be given to the availability of alternative housing supply in any cases where a home has not been brought up to the agreed standard in time.
Professional or representative body

It was noted that in pressured housing markets, there simply may not be other social rented sector homes into which people can be rehoused. It was felt that, in these circumstances, tenants should be given the choice as to whether they wish to remain in their home irrespective of whether it meets the minimum standard.

A small number of respondents did not agree with either the minimum standard or the 2025 milestone. Comments were that:

• 2025 is too early. An associated comment was that the timescale appears arbitrary and not linked to any evidence that it is achievable.
• 2025 is too late. A specific comment was that 2025 should act as a backstop but the main target should be 2020. One Local Authority noted that the challenges they have encountered in meeting the 2020 target suggest that the 2025 will be difficult to meet.
• A minimum of EPC D is not ambitious enough, or it is unacceptable to expect someone to live in a home that only achieves EPC D.

Proposal that landlords provide a short narrative explanation of their performance in their annual returns to the SHR

Question 8 - What are your views on the proposal that landlords would need to provide a short narrative explanation of their performance in their annual returns to the SHR?

A small majority of respondents who commented at this question agreed with the proposal that landlords would need to provide a short narrative explanation of their performance in their annual returns to the SHR. Housing Association and Local Authority respondents often welcomed the opportunity to provide the operational context within which they are delivering energy efficiency improvements:

The narrative explanation would be welcome as it allows the landlords to provide a local viewpoint or explain in detail the context of their performance together with the core statistics.
Local Authority respondent

It was also noted that:

The current Annual Return for the Scottish Social Housing Charter includes optional fields for indicators to provide narrative explanation of performance. Therefore, this proposal is aligned with existing practice.
Local Authority respondent

It was thought that the return would provide useful information for tenants about how their home is performing and should be publicly available in accessible formats. Involving tenants, for example through a short life working group, was proposed.

It was seen as important that the approach to be used is clarified at an early stage and that further detail:

…about the template or minimum information requirements will be needed to judge whether this will become an onerous requirement.
Housing Association respondent

Other proposals for how any reporting of performance should be framed were:

• There should be clear guidelines, with information submitted in a consistent format.
• It should be relevant and focus on delivering affordable warmth and good levels of tenant satisfaction.
• It should take an evidence-based approach. Alongside the narrative, detailed evidence should be provided. Examples might include quotes for works, building assessor reports and a log of installations and improvements over the year.
• Greater detail on reasons for failure will be required for the remaining exempted properties.
• Median performance should be reported as less than full compliance will not necessarily represent failure.

It was also suggested that landlords should be involved in developing the reporting framework to ensure it is fit-for-purpose.

Some respondents who agreed in principle raised issues or concerns they would like to see addressed:

• What the SHR would do with the information provided.
• That landlords will find themselves ranked in performance tables.

A small number of respondents disagreed with the approach; they were concerned that the approach gives landlords the opportunity to justify lack of action.

Proposal that limited exemptions should apply to the 2025 minimum standard for new lets

Question 9 - What are your views on the proposal that limited exemptions should apply to the 2025 minimum standard for new lets?

Some respondents noted their agreement with the proposal that limited exemptions should apply to the 2025 minimum standard for new lets. Comments in support were that this is a practical approach and allows an additional 5-year period after the first EESSH target to bring properties up to an EPC D. It was also noted that:

…if a property is only failing based on a previous tenant's reluctance to endorse a heating change then that can be rectified at change of tenancy.
Housing Association respondent

Suggestions as to how the approach should be taken forward were that the number of exemptions should be limited, and that there should be clear guidance on what is permissible. Clear rules about how social landlords would apply for an exemption, and how long an exemption can be in place were also proposed. A specific proposal was that there should be a clear route for exemption on technical grounds for non-traditional build forms.

Other proposals were:

• It may be helpful to review the list of exemptions nearer the time, as there is no way of predicting what technological advances will emerge.
• Flexibility will be needed if the supply of social housing is not to be reduced if properties cannot be brought up to standard.

Comments on the exemptions themselves were:

• Exemptions for 'technical, cost and unable to secure funding' should be merged into one exemption which is retained.
• Exemptions where tenants refuse to have work done may be needed. However, landlords should be required to provide evidence that they have attempted to engage with these tenants.
• Properties which fall under the hard-to-treat exemption should be revisited on a regular basis to see if new technologies, or other changes, make further improvements possible.
• The exemption for 'long term void' should be removed.

Other comments focused on timescales: both that excessive cost and funding exemptions should continue after 2025, and that they should not. There was also a view that the reasonableness of the proposal will ultimately depend on additional funding streams being made available.

Some respondents disagreed with the proposal, and with the removal of the technical and cost exemptions in particular:

The council does not agree with the proposal to remove technical, excessive costs and unable to secure funds as reasons for a property's exemption and would recommend these are retained up to the 2032 deadline. These reasons need to be retained as they allow social housing providers the ability to best manage their own stock and there is insufficient explanation or evidence in the consultation document to support their removal.
Local Authority respondent

As above, their concerns tended to reflect those highlighted at other questions and at Question 6 in particular: that it can be technically challenging to make improvements to some properties, including when they are empty, and that the change could lead to works being done regardless of their suitability to the fabric of the building. Other comments were:

• Owners of flats in mixed tenure blocks can still prevent work happening, irrespective of whether the social landlords' property is empty or not.
• Excessive cost needs to be taken into account when the necessary spend cannot be justified as representing value for money.
• There can be significant pressures to relet properties as quickly as possible, and there will be a tension between reletting and meeting the proposed standard.

It was also suggested that property exemptions based on technical, excessive costs and unable to secure funds should be retained up to the 2032 deadline.

Other respondents disagreed and thought that there should be no exemptions and that all social rented properties should meet the EPC D standard by 2025.