Private rented housing energy efficiency and condition standards: consultation

Executive Summary

This is a Scottish Government consultation paper that seeks views on improving the quality of private rented housing. It is in two parts - Part 1 proposes new minimum standards for energy efficiency to improve the least efficient properties, and Part 2 proposes amendments to the required condition standards to improve overall condition. These proposals will improve the living conditions of tenants in the worst performing properties, creating a more level playing field for tenants and landlords alike.

Background

This consultation forms part of the wider development of Scotland's Energy Efficiency Programme ( SEEP) which is the cornerstone of delivering the Scottish Government's designation of energy efficiency as a National Infrastructure Priority. SEEP is a 15 to 20 year programme that will significantly improve the energy efficiency and greenhouse gas emissions levels of our homes and buildings, to help tackle fuel poverty and meet Scotland's climate change targets in a way that is socially and economically sustainable. The implementation of SEEP will deliver a range of benefits, including:

• making our homes warmer and places of work more comfortable;
• promoting more affordable energy for consumers;
• helping to tackle poverty;
• improving competitiveness of the Scottish economy by creating substantial market and supply chain opportunities; and
• contributing to meeting our climate change targets.

To achieve this transformational change and to realise our fuel poverty and climate change objectives, we will need to use all the tools available to us. That will mean taking a strategic approach, setting out clear targets and milestones. And delivering this by putting in place grants, financial support and incentives, a system of standards and regulations to create certainty and drive change, and developing a strong and robust supply chain. We are currently consulting on policy options to support the development of SEEP ( http://www.gov.scot/Publications/2017/01/2195), and would encourage responses to that consultation (which closes on 30 May 2017) .

Minimum energy efficiency standards have a key role within SEEP, helping to drive improvement and create market certainty for investment. Minimum standards will act to improve the worst performing properties over time, giving certainty to tenants over the quality of privately rented accommodation, and helping to ensure that they have access to homes that are warmer and cheaper to heat.

Minimum standards through the repairing standard also play a key role in ensuring that tenants in the private rented sector have access to a good standard of housing. The repairing standard was introduced under the Housing (Scotland) Act 2006. The Scottish Government has undertaken a review of standards across all tenures of housing and this has noted the scope for updating the repairing standard, to provide private tenants with a similar standard to that available in social rented homes.

Consultation on energy efficiency and condition standards

This consultation document meets our Programme for Government commitment to consult on the regulation of private rented sector housing to increase efficiency standards. Ministers also made a Manifesto commitment to consult on a national standard for private rented homes to ensure a good basic standard of accommodation.

This consultation is in two parts. Part one seeks views on proposals for an energy efficiency standard for private rented housing. Part two seek views on changes to the condition standard for private rented housing.

• Part 1 consults on what the energy efficiency standard should be and how this is implemented and proposes that this rises over time. It asks whether a new minimum standards assessment should be introduced to help landlords know what to do, as well as using the existing energy performance certificate. It also examines the role for local authorities in enforcing the standard.

• Part 2 consults on changes to the condition standard for private rented housing. It asks about elements that would help to harmonise standards across social and private rented housing, additional elements to ensure that homes are safe, and whether the scope of the standard should be widened to include some private rented homes that are not currently included.

Part 1 - energy efficiency improvements - tackling the worst properties first

In Part 1, we set out that we are considering placing a statutory minimum standard of energy efficiency in private rented sector housing. This will be enforced by local authorities.

Homes in the private rented sector are the least energy efficient of all housing tenures. Introducing a new energy efficiency standard for the private rented sector will benefit tenants living in the coldest homes. We are proposing to tackle the worst first, as the vast majority will already be at a higher standard.

In Part 1, we suggest the following:

• The standard will apply to privately rented properties covered by the repairing standard.

• The standard will be based on the energy efficiency rating on the Energy Performance Certificate ( EPC). The standard will be an EPC band E initially (affecting 30,000 properties), and will be raised to a band D over time (affecting a further 65,000 properties). We are also seeking views on raising the standard further.

• Point of rental and backstop date: the standard will initially apply to properties where there is a change in tenancy, and then to all properties (known as the "backstop date").

• Meeting the initial standard of E: the standard will initially apply to properties where there is a change in tenancy after 1 April 2019. Where the EPC shows a band of F or G, the owner will need to have a minimum standards assessment carried out and lodged on the EPC register before renting out the property. The owner will have six months from the date of the assessment to carry out the work.

• Backstop date: all properties covered by the repairing standard would need to meet the energy efficiency standard by 31 March 2022 (the "backstop date"). Where a property has an EPC of F or G (and has not already complied with the energy efficiency standard at a change in tenancy), the owner would need to have a minimum standards assessment carried out by 30 September 2021, allowing a six-month period to carry out the required improvements ahead of the backstop date.

• Raising the standard to EPC D at a later date: similarly properties covered by the repairing standard would meet the higher standard at a change in tenancy after 1 April 2022 if they have an EPC energy efficiency rating of D, and this standard would apply to all properties by 31 March 2025. The application of the standard of D at change in tenancy and by the backstop date would work in the same way as for the initial standard of E. Any increase in the standard from 2025 would be considered following future review of the implementation of the initial minimum standards.

• Doing the work: the owner of the property will be responsible for getting the improvements required by the minimum standards assessment done.

• Fines: local authorities will have the power to issue civil fines of up to £1,500 against any owner who does not comply with the standard.

• Exceptions: there will be some situations where an owner is not required to do all the improvements identified in the assessment, or will have a longer time to do so. There will be a cost cap of £5000, and we are seeking views on the existing incentives available to improve the energy efficiency of privately rented properties.

We will consult from winter 2017/18 on proposals to increase the energy efficiency of owner occupier housing, including seeking views on the use of minimum standards and incentives. We will also consult on condition issues affecting housing generally, including the tolerable standard and regular maintenance in tenements.

Part 2 - condition standards - what people should expect from rented homes

The repairing standard is the minimum standard for private rented housing. Private landlords should ensure that homes meet this standard throughout a tenancy. Because standards in different tenures have developed separately there are differences between what tenants are entitled to expect in social and private rented housing. We think that where possible housing standards should be consistent across tenures.

Since the repairing standard was introduced in 2007 there have been rising expectations of what is needed to ensure homes are safe. We made changes to the standard in the Housing (Scotland) Act 2014 to introduce new duties in respect of carbon monoxide detectors and regular electrical safety checks. This consultation will ask about other safety elements that we think should be considered.

Many of these changes will be happening anyway as landlords improve their properties and meet the reasonable expectations of new tenants, but we think that they should be set out in a statutory standard.

In Part 2, we suggest the following:

• Changes to the repairing standard to bring it closer to the standard required in social rented housing as part of a programme to bring housing standards closer together: meeting the tolerable standard, safe kitchens, food storage, central heating, lead free pipes, safe access to common facilities, safe and secure common doors, and adding oil and other fuels to existing safety standards for gas and electricity.
• Other changes to the repairing standard to make homes safer by reducing the risks from scalding, electrocution, asbestos, unwholesome water, or the impact of noise. Also whether homes should have fridges and freezers (or the capacity for fridges and freezers) so that people can preserve food.
• Seeking views on widening the scope of the repairing standard to include agricultural tenancies and some holiday lets.
• A timescale for change to minimise the cost and impact on landlords and tenants and to fit into other targets set by government.
• We suggest that existing measures for enforcement are sufficient, but that there should be clearer rules on exceptional circumstances.

Further policy development and consultation to inform regulations

Subject to the outcome of this consultation, Ministers will develop draft regulations for further consultation. Changes would be brought in through secondary legislation through the Scottish Parliament, which will be introduced in advance of the standards applying to allow landlords time to prepare.