Energy efficiency and condition standards in private rented housing: consultation analysis

Raising the minimum standard beyond EPC D

The consultation paper explains that the Scottish Government's view is that there would be challenges in proposing a mandatory target beyond D as a minimum standard – both for cost and technical reasons, but also in terms of how this would fit with the longer-term priorities of the Climate Change Plan. It is proposed that any increase in the standard beyond band D should be considered once there is further information on the longer-term proposals for heat supply in the next Climate Change Plan, and once further work has been done to understand the feasibility of the measures needed to reach these standards. Policy decisions regarding long-term heat decarbonisation are not expected to be made by the UK Government until the next parliament i.e. from 2020.

Question 1.29 - What do you think the main benefits would be of introducing a minimum standard higher than D?

Around 125 respondents answered Question 1.29. The most frequently identified benefits were:

• To tenants in terms of lower energy bills, and a reduction in fuel poverty.
• Reduced carbon emissions.

Other benefits identified, although by fewer respondents were:

• Bringing energy efficiency standards in the PRS into line with the social rented sector.
• Providing certainty to the supply chain.
• Improvements to health of tenants.
• Helping owners to plan for the future.
• Benefits from low/zero carbon technologies.

It was also suggested there could be benefits to landlords in terms of increased value of the property, and to the nation in improvements to the quality of housing stock and wider socio-economic benefits such as improved educational outcomes or reduced spending on public services.

However, other respondents suggested they saw no benefits, or that achieving band C for many properties is impractical or not possible. Predicted adverse consequences were a reduced supply of rental property and increased rent levels.

It was also noted that the nature of the EPC process means that money saved per pound invested gets significantly less for each band moved upward. It was suggested that while moving the PRS to a minimum of band D would be a considerable achievement, requiring the installation of very expensive measures to move to higher bands, with the effect of raising rent levels to fund the investment, could penalise tenants.

Question 1.30 - We think that any increase in the standard beyond D would bring new challenges in the form of cost, technical considerations and alignment with the Climate Change Plan.

(a) Are there other new challenges you are aware of?

(b) How do you think we could address these challenges if we raised the minimum standard beyond energy efficiency rating of D?

Please explain your answers.

Around 110 respondents answered Question 1.30, although several simply referred to their answer at the previous question.

A number of respondents made general points to the effect that they did not agree with the challenges set out in the consultation paper, or considered it is necessary to raise the level to C to meet climate change targets and address fuel poverty. It was also suggested that, since the consultation paper notes that average costs (and benefits) of improvements beyond D are not yet available, it would be desirable for that further research to be undertaken to inform ongoing policy development. Respondents also restated opposition to a move above band D, or suggested that consumer behaviour/habits should be addressed, or that other building sectors or industries should be tackled first.

Other new challenges

On the specific question of new challenges, many respondents gave answers that echoed those at previous questions particularly with respect to costs, technical issues and challenges particularly for older and/or rural properties, and potential loss of rented property from the sector. Other points made included

• The measures required to achieve band C will often mean a property has to be vacant.
• Special provisions may be necessary for mixed ownership tenements.
• Withdrawal of small landlords may mean the sector is dominated by larger professional operators who can make economies of scale. This may reduce competition in terms of rent pricing.

How challenges could be addressed

Provision of grant funding or other incentives was the most frequent suggestion for meeting challenges associated with a move beyond band D. Other ideas included:

• A later backstop date for band D.
• A review of implementation after band D.
• SEEP should communicate clearly to the public that C is a 'good' standard, an aspiration and future destination.
• SEEP could promote the use of Building Passports which provide a tailored pathway for deep renovation in existing homes.
• More could be done to remove current uncertainties about the future heat energy mix by giving indicative milestones for the likely mix of heat pumps, district and communal heating, biomass, and electric.
• Work to improve EPC methodology and assessment quality should continue, including adjustments to recognise the value of low carbon heating.
• Create a role to manage larger scale works. This could include advice with tendering, supervising, possible decanting etc., but would also increase the costs of any potential works.
• There should be greater investment in renewables.
• Mains water and gas should be brought to rural communities.