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

Scope

The consultation paper explains that it is proposed that the minimum energy efficiency standard should apply to properties already covered by the repairing standard. By aligning the energy efficiency standard with this it will be clearer to landlords and tenants as to whether or not their property would be covered by the energy efficiency standards. If a tenancy is not covered by the repairing standard, or is already at the required minimum energy efficiency standard, the landlord will be under no obligation to improve the property's energy efficiency under these regulations. In these situations, landlords may still choose to carry out improvements to their property to make them more energy efficient.

Question 1.1 - Do you think that only tenancies covered by the repairing standard should have to meet minimum energy efficiency standards?

If not, what other privately rented tenancies do you think should be included?

Table 2: Question 1.1 – Responses by type of respondent.

A small majority of respondents, 56% of those answering the question, agreed that only tenancies covered by the repairing standard should have to meet minimum energy efficiency standards. Individual respondents were less likely to agree than those from organisations (45% and 66% respectively).

There were around 95 comments ^[1] at Question 1.1 with just over half coming from respondents who had answered No. The most frequent suggestion (from around 3 in 10 respondents who made a comment) was that all tenancies should be included. The majority of respondents expressing this view were individuals, although all categories of organisational respondents except landlords were also represented. A very different view, that the private rented sector ( PRS) is already heavily regulated and that no further measures are necessary with regard to energy efficiency, was noted by a smaller number of respondents (around 1 in 12), almost all of whom were individuals.

Respondents who had answered Yes to Question 1.1 mostly made no further comment. Those who did comment sometimes restated their agreement, adding that the proposal is appropriate or represents a sensible approach.

Otherwise at Question 1.1, similar points were raised by respondents irrespective of their answer to the Yes/No question. Reflecting the discussion presented in the consultation paper, the tenancies mentioned most frequently were agricultural tenancies and holiday lets, with smaller numbers of respondents making points about short-term lets. ^[2]

Agricultural tenancies

The inclusion of agricultural and tied tenancies was proposed by around 1 in 4 respondents who made a comment, particularly from the local authority, third sector and individual respondent groups, with around 1 in 7 specifically noting their support for the repairing standard covering these tenancies. Reasons given for taking this view included that housing standards in agricultural tenancies may be lower than in other parts of the PRS and that this is not justified or that additional research would be appropriate. Other points made included that tenants of tied properties cannot seek alternative accommodation; that tenants should be compensated if they pay for improvements themselves; that tenants of crofts are limited by the shortage of affordable housing in rural areas; and that there is concern about the high levels of fuel poverty in rural areas where agricultural tenancies are located.

A small number of respondents specifically expressed an alternative view that agricultural tenancies should not be included, while others described potential problems if energy efficiency standards were to be imposed. Issues raised tended to concern the economics of agricultural tenancies, or the duration and terms of such tenancies. Points made included:

• The ability of landlords to fund improvements is affected by low agricultural rents.
• Farm rents would have to be increased or dwellings let under a separate residential tenancy in order to fund investment in properties.
• Grant funding will be needed.
• Agricultural tenants have responsibilities for the repair and maintenance of residential properties within their tenancy agreements and additional responsibilities should not be passed to landlords.
• Agricultural tenants may be reluctant to allow landlords access and secure agricultural tenancies mean the landlord has no ability to remove the tenant, even temporarily, to carry out improvements.
• Employees in tied cottages may live in same property for many years and the measures proposed could be very disruptive.

Rural property

As with agricultural tenancies, it was suggested that rural properties in general often attract relatively low levels of rent, and these may not provide a return on investment. Other comments included that where local market conditions will not support increased rents, landlords may consider selling properties, converting them into holiday lets, or leaving them empty. It was suggested that loss of affordable rented housing stock in rural areas could result accompanied by increasing numbers of homelessness applications to councils.

Holiday lets

Extension of minimum energy efficiency standards to include holiday lets was also proposed by a number of respondents with some also suggesting the repairing standard should be extended to include holiday lets. Almost all of those proposing inclusion of holiday lets also favoured inclusion of agricultural tenancies.

Points raised by those in favour of including holiday lets included:

• If they are not covered, landlords could switch properties to holiday lets to avoid the costs of upgrading. This could exacerbate shortages of affordable housing and undermine energy efficiency targets.
• Properties regularly move between the holiday sector and other tenure types, and regulations should be applied equally.

However, a small number of respondents argued against inclusion of holiday lets including because:

• They form an important part of Scotland's tourism economy and, as a result, some respondents thought they should be granted exemption from energy performance standards.
• Some respondents suggested that the inclusion of short-term holiday lets would be contrary to the principles of the Scottish Government's Better Regulation agenda, particularly in relation to proportionality and targeting.
• It was noted that holiday lets may only be offered for letting during the spring and summer, and suggested that the calculation of thermal efficiency based on occupancy throughout all the year is inappropriate.

Short term lets

It was also suggested consideration should be given to including properties offered for short term let via platforms such as Airbnb. The concern was that landlords may choose to move away from residential letting to short term letting if variations in standards make it easier, cheaper or more profitable to do so and it is important that regulations keep up with developments in these markets.

Other comments

Finally at Question 1.1, respondents made broader points about the process including that:

• The energy efficiency standard should be included within the repairing standard, rather than establishing a separate system.
• Exceptions may be needed for older properties, and listed buildings, where improved energy efficiency can be both difficult and expensive to achieve. Issues associated with building age and construction building types are discussed in more detail at Question 1.2.
• It is the occupant who consumes energy not the property and, depending on how the property is used, the potential reduction in energy consumption may not be delivered.
• Costs to tenants through increased rents must not outweigh the benefits, including savings in terms of fuel bills.
• Conditions such as limiting rent increases or the ability to sell the property for a specified period should be attached to any improvement grants.