Developing an Energy Efficiency Standard for Social Housing: consultation

4. Why is a new standard necessary?

This chapter looks at:

• Reasons for introducing a new Energy Efficiency Standard
• Owner-occupiers and private rented housing
• The benefits to tenants and encouraging energy efficient behaviour

Reasons for an Energy Efficiency Standard for Social Housing

4.1 The Climate Change (Scotland) Act 2009 requires the Scottish Government to set out how Scotland will meet targets to reduce greenhouse gases from 1990 levels across all sectors by 42% by 2020 and 80% by 2050. There are no sectoral targets for meeting the 42% reduction, the 2020 target relates to Scotland as a whole.

4.2 Meeting the Scottish Housing Quality Standard ( SHQS) in 2015 will be a significant contribution to meeting Climate Change and fuel poverty targets, but more needs to be done, for three main reasons:

• Just because the building fabric is better than it was in 1990, does not necessarily mean that emissions are reduced. The National Atmospheric Emissions Inventory ( NAEI) suggests that between 1990 and 2008 emissions only fell by 11%. Indeed, figures for domestic energy consumption in 2010 suggest that emissions for that year may actually be similar to 1990 levels, despite more and more homes meeting the SHQS.
• Some landlords have already applied for exemptions from the SHQS for their properties. Landlords are not required to specify the reason for the exemption, but it is reasonable to assume that at least some of the requests are due to a difficulty in meeting the energy efficiency element of the SHQS. And the more homes that don't meet the SHQS means that the total reduction in greenhouse gas emissions will be reduced and fewer tenants will have warmer, more energy efficient homes. The new standard proposes to remove the need for exemptions ²¹ by ensuring that all stock makes a proportional contribution to the target.
• The high incidence of low income households in the social housing sector means that continuing to increase energy efficiency standards can also contribute to the alleviation of fuel poverty.

4.3 Social landlords are well placed to act as pioneers for the housing sector because of their ability to plan and manage improvement programmes and offer economies of scale. This is attractive to energy companies seeking to fulfil existing obligations under the Carbon Emission Reduction Target ( CERT) and Community Energy Saving Programme ( CESP), both of which will be replaced by the Green Deal and the Energy Company Obligation ( ECO) ²² . This should also help to drive down the cost of more expensive measures and develop new approaches that can then be adopted more widely.

Question 1: Do you have experience, or know of, social landlords acting as 'pioneers' in addressing energy efficiency?

Question 1(a): If 'yes', please provide details, including any web links/contact details you may have.

Question 2: For landlords, what is the greatest cause of SHQS exemptions in your stock? Is there anything that the Scottish Government could do to assist in reducing exemptions?

4.4 Social landlords also have a duty, as part of the Scottish Secure Tenancy agreement to ensure their properties are "wind and watertight, habitable and in all other respects reasonably fit for human habitation" ²³ . The model tenancy agreement requires landlords to:

"provide and maintain the house so that any tenant who we might reasonably expect to live in the house can heat the house to a reasonable temperature at a reasonable cost, so as to avoid condensation dampness and mould. If during the tenancy, the house suffers from condensation dampness which is partially or wholly caused by a deficiency in, or absence of, any feature of the house (including insulation, provision for heating or ventilation), we will carry out repairs (including, where appropriate, replacement, addition or provision of insulation, ventilation or heating systems) within a reasonable time so that that feature is not a cause of the condensation dampness' ²⁴ .

4.5 For all the above reasons, it is necessary to set an energy efficiency standard for social housing, as set out in Homes Fit for the 21 ^st Century.

Owner-occupiers and private rented sector

4.6 Whilst this consultation is focused on the social rented sector, the Scottish Government is considering the need for regulations to improve the energy efficiency of Scotland's housing in the owner-occupied and private rented sectors as well. This could further assist local councils and social landlords undertaking energy efficiency improvement works in mixed tenure areas.

4.7 Section 64 of the Climate Change (Scotland) Act 2009 gives the Scottish Government powers to regulate both owner occupiers and the private rented sector to improve the energy efficiency of Scotland's housing. In its report 'Regulation of Energy Efficiency in Housing' ²⁵ , the Scottish Government said it would not be appropriate to introduce regulations before 2015 to allow a further opportunity to provide assistance and incentives to take up energy efficiency measures.

4.8 The Energy Act 2011 also provides powers to set minimum standards for energy efficiency only in the private rented sector. This power will apply to Scotland, but not before 2015. This is consistent with our position in relation to the Climate Change (Scotland) Act powers and means that the Scottish Government has flexibility as to when any minimum standards might apply from. In England and Wales, the intention is that the minimum standards for the private rented sector will apply from 1 April 2018.

4.9 The Scottish Government's Sustainable Housing Strategy ( SHS) is seeking views on the possibility of introducing private sector regulation, and some of the issues that need to be considered. These will include timing of regulation, what it should look like, how regulation and incentives will fit together and how it will be enforced. For more information on the possible regulation of the private sector, please see the consultation on the Sustainable Housing Strategy: http://www.scotland.gov.uk/Topics/Built-Environment/Housing/sustainable.

Question 3: What has been your experience in improving properties in mixed tenure estates?

Question 3(a): If you have developed solutions to work with owners and/or private sector tenants, please provide details.

Benefits to tenants

4.10 The standard will focus on the fabric of the building, rather than occupant energy use. However, it should be emphasised that energy efficient homes will not automatically reduce fuel bills or carbon emissions. For example, people may find they can afford to heat their homes at lower cost so they may choose to turn their thermostat up or have their heating on for longer and therefore not reduce energy consumption. In cases of under-heating, where tenants on low incomes are unable to heat their homes adequately, this is a positive step (though for under-heated homes with poorer insulation levels, this can result in increased surface condensation which can lead to mould growth) ²⁶ . Nonetheless, there is a risk of landlords investing in their stock to improve its energy efficiency, whilst the occupant behaviour means that the potential benefits of this, in terms of lower fuel bills and reduced emissions and fuel poverty being addressed, are not fully realised.

4.11 It is essential that tenants understand the need to become more energy efficient, the potential benefits to them and why work is being done to their homes. Occupants also need to understand what they can do to play their part in meeting climate change targets, whilst managing their fuel use. Landlords have an important role to play here, and they should also make sure that tenants are given appropriate advice and support so that they know how to maximise the benefits of heating systems and other measures. There are a number of potential benefits for tenants that landlords can highlight, including:

• A minimum level of thermal efficiency will be of benefit to all tenants. A more energy efficient home should help a tenant to manage their fuel use more effectively, with any savings going into tenants' pockets.
• As with all properties, there are some social rented tenants who may spend proportionally more time in their homes (caring responsibilities, unemployment) and they are generally more likely to be vulnerable households. Increased thermal comfort (coupled with likely more cost-effective energy usage) will help.

4.12 Tenants in the social rented sector are entitled to a certain level of quality and service from their landlord, which is reflected in the principles of the Social Housing Charter. However, as with all housing, this doesn't mean that the occupant of a social rented home acts in an energy efficient manner. Whilst people cannot be compelled to reduce their energy consumption, they can be encouraged to do so. It is therefore proposed that the standard includes a duty on social landlords to encourage tenants to reduce their energy consumption . This would range from advice about basic steps (such as switching off lights and appliances when not in use, buying energy efficient appliances, etc.) to more detailed education and support about how to use any new energy efficient technologies that had been installed. This should not just be a one-off visit, but should include follow-up visits to make sure people are using any new technologies correctly and are getting the benefit of them.

Question 4: The Energy Efficiency Standard for Social Housing will directly affect a diverse group of social sector tenants who have individual needs and experiences. In your view, is improving the energy efficiency of social rented housing a priority for tenants? Yes/No

Question 4(a): If 'yes', are the suggested 'potential benefits' broadly the right ones? Are there any others you would suggest?

Question 4(b): If no, why is this? How would you suggest we increase tenant awareness of the importance of energy efficiency?

Question 5: Do you consider any particular equality groups ²⁷ will be at significant risk as a result of this new policy? If so, please outline what measures you consider appropriate to minimise risk.

Question 6: Do you think the implementation of the Standard will cause an undue financial burden on any particular equality group? If so, we would welcome your views on what action could be taken to minimise that burden.

Question 7: What else would you suggest to help tenants better manage their energy consumption?

Smart Meters

4.13 Smart meters enable households to monitor real-time energy use via an in-home display. Studies have shown this can have an impact on energy use behaviour. ²⁸ The mass roll-out of smart meters is a reserved matter and is led by the Department of Energy and Climate Change ( DECC). The mass roll-out is expected to start in 2014 and to be completed in 2019. The majority of consumers will receive their smart meters during the mass roll-out.

4.14 According to the DECC website ²⁹ , Smart Meters will deliver a range of benefits to energy consumers including:

• Giving domestic consumers near real time information on their energy consumption through an In-Home Display to help them control energy use, save money and reduce emissions.
• Providing more accurate information and bringing an end to estimated billing
• New products and services will be supported in a vibrant market in energy and energy management
• Smart meters will also give suppliers access to accurate data for billing and to improve their customer service, in turn benefiting consumers.

4.15 A combination of advice and information (from landlords, public sector bodies, energy companies and others) with the ability to monitor energy consumption should help people manage their energy consumption more efficiently. This will also mean that tenants will see the benefits of, and better understand the need for, their landlord's investment in energy efficiency improvements.