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

Setting the level of the minimum standard

It is proposed that an initial standard of E should be set from 2019, rising to D within 3 years. This will ensure that action is taken to improve the worst performing properties first, while also setting out a clear direction for owners of rented properties that a higher standard will be required over the longer term.

Question 1.4 - Do you think that the minimum energy efficiency standard for private rented properties should be set at an energy efficiency rating of E in the first instance?

Please explain your answer.

Table 5: Question 1.4 – Responses by type of respondent.

Type of respondent	Yes	No	Don't know	Not answered	Total
Organisations:
Energy-related private sector	5				5
Landlord	9	10	1	8	28
Letting agents etc.	5	4	1	2	12
Local Authority	14	5	2	1	22
Other	2			2	4
Professional body	11	6	1	8	26
Third sector	4	5		2	11
Total organisations	50	30	5	23	108
% of organisations answering	59%	35%	6%		100%
Individuals	32	39	11	8	90
% of individuals answering	39%	48%	13%		100%
All respondents	82	69	16	31	198
% of all respondents	41%	35%	8%	16%	100%
% of all those answering	49%	41%	10%		100%

There was no clear balance of opinion at this question. Of those answering, 49% agreed that the minimum energy efficiency standard for private rented properties should be set at an energy efficiency rating of E in the first instance. However, 41% disagreed and 10% said they did not know. Individual respondents were less likely to agree than those from organisations (39% and 59% respectively).

Around 155 respondents made a comment at Question 1.4. Among respondents who agreed with the proposed approach, comments included that this is sensible, logical, reasonable or achievable and would make the position in Scotland the same as that in England and Wales. It was also suggested the staged approach would encourage acceptance from landlords and give landlords time to plan for further improvements but ensure that the worst performing properties were improved first. From an administrative perspective, it would affect fewer properties initially, giving an opportunity to review the processes involved before the move to D which will affect a larger number of landlords. It was also suggested that the backstop date for achieving an E rating should be brought forward from March 2022 to March 2021.

Respondents who disagreed with setting minimum energy efficiency standard at E in the first instance gave widely differing reasons for their views:

• Some disagreed with setting a minimum level at all.
• Some thought E to be too high, or that the minimum should not be raised above E.
• Some thought E not high enough.

Irrespective of their answer to the Yes/No question, many respondents actually made similar points – set out below - concerning issues that they thought needed to be addressed, although differing as to whether they saw a 'challenge' or something that simply could not be achieved.

Rural properties

Respondents who disagreed with the proposal often restated points made at earlier questions about serious economic, technical and practical difficulties in improving the ratings for traditionally built properties, particularly in rural areas. Respondents who agreed with the proposal also noted that the minimum standard of band E will itself be challenging, especially for some rural properties.

Exceptions and special cases

Both respondents who agreed and those who disagreed with the proposals pointed to the need for exceptions, or for differing standards to be set for different types of property or location. Introduction of benchmarks made up of fuel type and age of building were suggested, and that these could be refined over time to better reflect the potential of each 'benchmarked' home.

However, it was also suggested that any process for making a property exempt should be both challenging and auditable.

Incentives / assistance / engagement

Respondents sometimes suggested landlords will need help to understand the requirements and their options and to be provided with incentives or financial assistance. Specific suggestions included:

• Tax relief/incentives.
• Reimbursement of VAT.
• Low cost loans and grants.
• An engagement and support programme, including incentives and promotions to encourage and reward early adoption of the standard.

Other points on the need for engagement included that, unlike social landlords (who worked to the Scottish Housing Quality Standard before the Energy Efficiency Standard for Social Housing was introduced) the PRS has not had to meet minimum energy efficiency standards before, but does have very diverse management.

Moving to band D

Many respondents suggested the staged approach proposed may be more confusing, expensive for landlords or disruptive for tenants, and that it would be better to go straight to band D, sometimes suggesting a longer lead time would be required as a result. Others argued that the further action necessary to achieve the D rating should be explained, allowing landlords to make informed decisions about the future and whether upgrade straight to D and that clear guidance about the future trajectory of regulation in this area is necessary.

Additional reasons given for setting the initial target at D included that it would be more effective use of the resources local authorities will have to invest in regulation and enforcement, it would give parity with the social rented sector, and that measures to alleviate fuel poverty should be implemented as soon as possible. A route map to a longer-term minimum of band C was also proposed.

However, other respondents cautioned against future move to band D, suggesting this is unrealistic or that a review should be carried out first to assess the success of the first phase and identify any unintended consequences.

Tenant choice

A small number of respondents argued that the regulation proposed may take choices away from tenants. Their points included that:

• Some tenants find renting convenient for career purposes, but are not necessarily short of money and may prefer facilities or equipment with higher energy requirements.
• Some tenants may prefer to live in older or rural properties, possibly paying a lower rent which could offset higher energy costs. As long as they are aware of possible higher energy costs they should have freedom to choose, and imposing a minimum standard removes the ability for the Tenant and Landlord to negotiate a settlement.

Questions on information in the consultation paper

A number of respondents also questioned some of the information presented in the consultation paper including:

• The projected costs for implementing energy efficiency measures for band E, F and G properties represent significant underestimates.
• The number of properties affected is underestimated.
• Information on how many properties are expected to be removed from the F and G housing stock without regulation has been omitted. It was suggested that ratings will improve in any case as properties are refurbished, better technologies are available, and tenant's expectations increase.