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

Summary findings

This summary gives an overview of some of the key themes to emerge from the analysis of responses to Part 1 of the consultation and also sets out the overall balance of opinion at some of the key questions asked.

Overall themes

• Overall, respondents' views at many of the questions posed were mixed.
• A key theme to emerge was around the practicality and cost implications of extending some of the proposed required improvements to older, rural properties and agricultural tenancies.
• Views were mixed as to the proposed timescales for introducing a minimum standard of Energy Performance Certificate ( EPC) band E, first at change of tenancy and then at a backstop date. Those who disagreed with the proposed timescales tended to think they were too soon.

Scope

The consultation sought views on whether only tenancies covered by the repairing standard should have to meet the proposed minimum energy efficiency standards. A small majority of respondents (56% of those answering the question) agreed. The most frequent suggestion was that all tenancies should be included. An opposing view was that the private rented sector is already heavily regulated and no further measures are necessary.

Bringing in the standard at the point of rental and then at a backstop date

Respondents were asked whether they thought that the minimum energy efficiency standard should first of all apply only to those properties where there is a change in tenancy, and after that to all private rented properties. A majority of respondents (63% of those answering the question) agreed.

As an alternative to a change in tenancy, a number of respondents suggested using the already existing Landlord Registration Scheme as a simpler mechanism for enforcement, while still capturing all property over a 3-year period.

When to introduce the standard and increasing it over time

A small majority of respondents (53% of those answering the question) disagreed that 1 April 2019 is the right date to start applying the minimum standard of EPC band E when there is a change in tenancy. There was no clear balance of opinion as to whether 31 March 2022 is the right backstop date, by which all privately rented properties would need to meet the minimum standard of E (44% agreed and 45% disagreed). The most frequent reason given by respondents who did not agree was that 31 March 2022 is too soon, and 5 years was frequently suggested as an alternative.

A majority of respondents (57% of those answering the question) agreed that the trajectory after 2022 should be set out now. However, a majority (55%) did not agree that the next standard should be to meet an EPC of D at point of rental from 1 April 2022, and in all privately rented properties by 31 March 2025.

Minimum standards assessment

Around 3 in 10 respondents who made a comment agreed that a new minimum standards assessment ( MSA) which would tell landlords how to bring their properties up to standard should be based on EPC methodology. However, many other respondents described problems they saw with the existing EPC system, including suggesting that it requires revision. Some also suggested that the potential for costs to vary from property to property, including because of location or construction type, should be recognised.

A substantial majority of respondents agreed that the assessment would include a calculation of the property's EPC rating before identifying the appropriate measures, where there is no EPC under the current version of the EPC methodology. This was seen as a positive or reasonable approach that allows for a more comprehensive and tailored assessment.

Of those answering the question, 44% of respondents agreed that a new role of a minimum standards assessor is needed. The most frequently-raised issues were the need for better understanding or knowledge of specific building types and construction methods.

What happens if the property doesn't meet the standard?

A majority of respondents (60% of those answering the question) agreed that local authorities should be responsible for enforcing the standard if the property is not improved within six months or by the backstop date. However, the most frequent comment, made by around 2 in 5 respondents, was that local authorities need to be provided with additional resources to take on this work, or that they lack the capacity to do it at present.

When asked whether the penalty for not complying with the standard should be a civil fine against the owner, the largest proportion of respondents (42% of those answering the question) said it should not. Many respondents suggested that rent penalty notices would be preferable to fines.

With respect to the level of fines proposed, a majority of respondents (55% of those answering the question) did not think these are appropriate and proportionate. The most frequently-made comments were that 6 months is too short a period for the landlord to carry out the work and/or that the proposed levels of fines are too high.

The consultation paper also asked about exceptions where a longer timeframe should be allowed for compliance, and here flexibility or discretion on the part of the enforcing body was welcomed by many respondents. It was also suggested, however, that there must be consistency of application across local authorities. Many respondents thought that there would be other situations that should qualify for an extension, with frequently-made suggestions including work on older or listed buildings, where subject to planning constraints, or in conservation areas.

Exceptions are also proposed for some situations where owners would not be penalised for failing to carry out the full improvement identified by the MSA - for technical or legal reasons, or because of the excessive costs involved. Respondents often agreed with the technical and legal grounds suggested in the consultation paper. Although there was also a significant level of agreement with the excessive cost reasons proposed, a number of respondents questioned the figures for estimated costs presented in the consultation paper. Other suggestions on the level of a cost cap included that rather than being set at a flat rate of £5,000 per property, the cap should be based on rental value, property value, the size of a landlord's organisation, or a percentage of the annual Local Housing Allowance rate.

Respondents who commented on the proposal that the exception should apply for 5 years often agreed, although a range of alternative validity periods was also proposed.

In terms of evidence required it was suggested that the onus should be on the landlord to provide evidence. The importance of ensuring consistency between local authorities was also noted and guidance on typical exception scenarios and the standard of evidence to be retained was requested.

Assessing impact

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.

Potential negative impacts for business were both more numerous, and were identified by larger numbers of respondents. Those most frequently suggested were: that landlords will withdraw property from the private rental market for economic reasons; and increased rental prices - resulting both from landlords increasing prices to recoup their investment, and from reduced supply of property in the rental market.

With respect to the interim Equality Impact Assessment, 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.

This remainder of this chapter sets out a question-by-question analysis for Part 1 of the consultation.