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

Assessing impact

Question 1.31 - Please tell us about any potential economic or regulatory impacts, either positive or negative, that you feel the legislative proposals in Part 1 of this consultation document may have, particularly on businesses (including landlords).

Around 125 respondents answered Question 1.31. Potential positive impacts for business were largely identified as being for firms supplying or installing energy efficiency measures. Reduced energy bills and improved living standards for tenants were also identified as a positive outcome.

Several respondents suggested that, for landlords, there could be benefits in improved property condition and value, lower turnover of tenants and reduced void periods, and the enhanced reputation of the PRS. Other respondents, however, cited evidence that energy efficiency is not currently well reflected in property values.

A possible benefit to mixed-tenure housing was also noted. It was suggested that landlords of private rented properties have sometimes delayed improvements sought by other owners (whether social landlords or private owners) and that application of the regulations could help to resolve this.

Potential negative impacts for business were both more numerous, and were identified by larger numbers of respondents. Those most frequently suggested were:

• Landlords will withdraw property from the private rental market for economic reasons. It was suggested this may be particularly pronounced in rural areas and for smaller landlords.
• Increased rental prices, particularly in rural areas. It was suggested that this could result both from landlords increasing prices to recoup their investment, and from reduced supply of property in the rental market. The potential impact on availability of affordable housing, particularly in rural areas was highlighted. Several respondents suggested that rent increases should be monitored.

Increased costs to landlords were also highlighted as was a view, also expressed at earlier questions, that the modelling employed in the consultation paper significantly underestimates the cost of improvements, which will be higher in rural areas. One respondent questioned a suggestion in the BRIA that those with a portfolio of properties may make savings, arguing this to be particularly inaccurate for those with rural portfolios where costs will be significantly higher.

The particular effects of increased costs for small landlords were also noted.

It was also suggested that costs to landlords as a result of the present legislation should not be seen in isolation, but as part of the recent series of reforms in the PRS, and also in the light of changes to tax relief.

Other potential negative consequences, but identified by fewer respondents included:

• Costs to local authorities, both for enforcement of the regulations and for consumer protection issues, for example concerning mis-selling.
• Poor quality installation, if owners prioritise price over quality of work.
• House prices could be adversely affected if large volumes of rental property are put on the market. Local communities could also suffer if property is left empty.
• Effects could be particularly severe in areas already suffering an economic downturn and falling rental incomes. The oil industry in Aberdeen was referenced.
• There could be increased demand for social housing if the private sector contracts.
• Landlords may remove property from the residential market for use as holiday lets. It was also suggested that the regulations should extend to holiday rental properties for this reason.
• Landlords may reduce spend on non-essential items not related to energy performance.
• There could be reduced demand for the services of property management companies, in line with reduced volumes of rental property.

Question 1.32 - In relation to the interim Equality Impact Assessment, please tell us about any potential impacts, either positive or negative, that you feel the proposals in Part 1 of this consultation document may have on any groups of people with protected characteristics. We would particularly welcome comments from representative organisations and charities that work with groups of people with protected characteristics.

Around 50 respondents answer Question 1.32. A small number of respondents suggested they had not identified any impacts.

Many of those who identified positive impacts pointed to the benefits of improved energy efficiency and reduced heating costs for all tenants, including those with protected characteristics. It was also noted that fuel poverty may disproportionately affect people with some protected characteristics.

Higher rental payments were noted as having the potential to negatively affect people with protected characteristics including having potential to force older tenants into social housing. It was also suggested that households, including older people or people with a disability, may find it difficult to deal with disruption during improvement works. Installation of inappropriate insulation or lack of proper ventilation were also highlighted as creating potential health risks to tenants, with a suggestion of adverse consequences for the health of older or vulnerable people.

A health impact assessment on the Regulation of Energy Efficiency in Private Sector Homes ( REEPS) was also advocated.

Question 1.33 - To help inform the development of the Child Rights and Wellbeing Impact Assessment, please tell us about any potential impacts, either positive or negative, that you feel the proposals in Part 1 of this consultation document may have on children's rights and welfare. We would particularly welcome comments from groups or charities that work with young people.

Around 40 respondents answered Question 1.33. Most respondents considered the proposed changes would have positive impacts for all tenants and for children, including for children living in households affected by fuel poverty. Respondents also highlighted a Scottish Fuel Poverty Working Group report stating that small children are among those most at risk from the ill-effects of living in a cold home and it was suggested that children living in warmer homes are less likely to develop health issues.

Potential benefits suggested included that family income not spent on heating might be redirected to improved nutrition or more physical activity and that children may do better at school.

Around 1 in 6 respondents identified potential negative impacts including that any increased rent levels may leave lower disposable incomes for families with children, and that loss of property from the PRS may adversely affect families with children, including families seeking affordable housing or families waiting for temporary accommodation. It was also suggested that households with children may be disproportionately disturbed by improvement works, with additional impact for schooling if families have to relocate to find alternative accommodation.

Attention was also drawn to the Welsh Government's Wellbeing of Future Generations Act. This was reported to place a duty on public bodies to consider the impact of decisions on future generations, and to require them to undertake 'sustainable development', setting out how they will meet Wales' wellbeing goals and taking all reasonable steps to deliver these. The Scottish Government was encouraged to adopt similar principles.