Developing regulation of energy efficiency of private sector housing (REEPS): modelling improvements to the target stock - Research Summary

Policy scenarios

Four policy scenarios were modelled to explore the least cost way in which to improve the energy efficiency of the private sector stock in EPC bands EFG:

• Scenario 1: improving all dwellings to reach EPC Band F
• Scenario 2: improving all dwellings to reach EPC Band E
• Scenario 3: improving all dwellings to reach EPC Band D
• Scenario 4: improving all target dwellings to move up one banding

Scenarios 3 and 4 affect more dwellings than do the other 2.

• 29,676 dwellings would be improved by Scenario 1
• 170,708 dwelling would be improved by Scenario 2
• 400,548 dwellings would be improved by Scenarios 3 and 4.

Dwellings in rural areas tend to be less energy efficient than those in urban areas. The majority of dwellings affected by Scenarios 1 and 2 would be in rural areas (67% and 59% respectively) while 42% of dwellings affected by Scenarios 3 and 4 would be in rural areas.

Overall, 19% of REEPS target stock is privately rented, but a higher proportion of private rented dwellings are in the lowest EPC band ratings of G and F. The implementation of regulations will be closely linked to the letting of private rented properties and the sale of owner occupied dwellings. Turnover rates of privately rented dwellings are higher than that of owner occupied dwellings. The private rented sector will therefore account for a vast majority of the REEPS target stock in the first few years of REEPS. After 3 years, private rented dwellings will account for 81% of dwellings in scenario 1, 67% in scenario 2 and 62% in scenario 3 and 4.

The number of dwellings to be improved and the average capital cost of improvements per dwelling drive the overall cost of each scenario:

• Scenario 1 (to reach EPC band F) would require £18.6 million
• Scenario 2 (to reach EPC band E) would require £210.2 million
• Scenario 3 (to reach EPC band D)would require £1,070.2 million
• Scenario 4 (all up one band ) would require £388.1 million

The average capital cost of improvements reflects both how much each dwelling needs to be improved and the base position of the dwelling. The average cost of improvements tends to be higher for dwellings in rural areas than dwellings in urban areas across all Scenarios. This difference is most marked for Scenario 3 - £4,092 compared to £1,656. This is mainly because of the higher proportion of rural dwellings in EPC bands G and F.