The Energy Efficiency (Private Rented Property) (Scotland) regulations 2020: consultation analysis

Executive Summary

Background

This report presents analysis of responses to 'Energy Efficient Scotland: The Energy Efficiency (Private Rented Property) (Scotland) Regulations 2019' and associated Guidance. The consultation opened on 17 June 2019 and closed on 13 September 2019.

The consultation paper (available at: https://www.gov.scot/publications/energy-efficiency-private-rented-property-scotland-regulations-2019-guidance/) sets out the intentions of Energy Efficient Scotland to require landlords of privately rented homes to meet minimum energy efficiency standards from April 2020. The intention is to achieve this through bringing forward regulations based on Energy Performance Certificate (EPC) ratings. Initially minimum energy efficiency standards will be introduced under Section 55 of the Energy Act 2011 and will require landlords of privately rented homes to ensure their properties achieve EPC Band E from 1 April 2020 at a change of tenancy, and then EPC Band D from 1 April 2022 at a change of tenancy.

This consultation sought to raise awareness of the standards proposed and the means by which they will be introduced. As well as this the consultation sought views on nature of the guidance to support the Regulations to ensure that users have sufficient information to begin implementation of the standards required.

In total 40 consultation responses were received, of which 11 were from individuals with properties, housing providers, landlords and their representative bodies, 10 were local authorities, 1 Non-Departmental Public Body (NDPB), and the remainder comprising organisations and professional bodies or Industry associations/manufacturer and commercial organisations.

Exemptions

The first question sought views on the level of information to be provided by landlords regarding exemptions to the regulations. A majority of respondents supported the principle of exemptions but thought that the information provided did not provide the level of direction needed to understand how to meet the standard or seek an exemption.

Flaws with EPCs – some respondents provided detailed comments on the limitations and issues associated with the EPC to measure of energy efficiency. They suggested the use of alternative measures as a more appropriate way forward. This point was repeated in other question responses in the consultation.

Time to implement the changes – the time given to achieving the standards was considered by some to be an issues and concerns were raised about the ability of the supply chain to cope. There were also concerns that landlords with large portfolios would face challenges managing works within their stock in a way that does not adversely impact tenants.

Impact of the regulations – a small number of respondents noted that an unintended consequence of the regulations might be a reduction in the availability of housing stock, particularly in rural areas. This point was also raised in response to other questions posed in the consultation.

Enforcement – generally greater clarity on what would be required, in practical terms, was sought from all groups of respondents.

Clarity and definitions– Detailed comments were made on all parts of the regulations and guidance relating to exemptions, seeking greater clarity. The need to ensure consistency between the information contained in the regulations and guidance was also noted by some.

Doing the work

Questions 2 and 3 asked for views on the range of support which is currently available to help private landlords and tenants improve the energy efficiency of their properties and reduce fuel bills.

In general, most felt that more support would assist in the delivery of the regulations, although the quality of existing support was acknowledged.

Financial aid – most who expressed a view on existing finance products sought a broadening of the criteria to allow support for all Private Rental Sector (PRS) landlords; including those facing particular pressures associated with volume and poor quality of stock. Those suggesting an increase in the availability of grants were generally of the view that this would greatly assist the realisation of the regulations aims. Some noted that targeted grants based on tenant need would assist in this, but changes are needed to the existing arrangements to aid this.

Advice services – most accepted that the current advice service was playing an important part, but it was considered that more could be done with particular regard to specific advice on more problematic building types. Many felt that the promotion of available services could be improved. Some noted the need for improved quality assurance within the supply chain, with some raising similar points as made above regarding more problematic and traditional building stock.

Question 3 asked for additional information regarding changes in behaviour which could be brought about by changes to the support services discussed in question 2.

Generally, those responding thought that if their proposed changes, as set out in their response to question 2 were actioned, implementation of standards would improve. Some suggested the focus should not be on the speed of introducing regulations and standards, but about trying to achieve the best possible outcome for landlord, tenant and building.

Cost cap and its practical application

Question 4 posed an option for works carried out in advance of 1^st April 2020 to be taken into account if a landlord was seeking an exemption based on costs. The question then went on to ask what information should be provided to seek an exemption based on the cost cap.

There was majority support for the concept of accepting work carried out in advance of the regulations coming in to force as part of any cost cap exemption

6 Month Lead in Time - Responses were split on the proposed timeframe for carrying out work before the regulations come into force, between using 6 months or using a longer alternative. The majority of those supporting a longer timeframe were made up were made up of individuals with properties, housing providers, landlords and their representative bodies. This group felt that the practicalities of carrying out work had not been adequately taken into account. They included issues with supply chain, ongoing lack of clarity on the works required under the regulations, likely impact on tenants, and the need to plan work over a longer period, (particularly where there is a large portfolio) to be considered.

Required information in support of a cost cap exemption – A majority suggested the supply of written evidence from impartial/independent suppliers or consultants, or from recognised support agencies such as Home Energy Scotland would be appropriate. A small number suggested the use of in-house teams where these existed. Further options suggested were a trusted trader type approach and the use of technical experts to support local authorities in their review of information supplied.

Other issues raised included the need to review the cost cap to take into account inflation, the need to support local authorities in carrying out the work needed to assess the information supplied, and the need for additional clarity regarding the practicalities of applying the regulations.

Enforcement and fines

Question 5 asked for views on the proposed breakdown of penalties and fines, set within the context of the limitations of the maximum financial penalty set by the Energy Act 2011.

Most respondents supported some form of penalty, in the form of fines, for non-compliance and to encourage compliance. Many considered there needed to be higher levels of fines to act as a true deterrent against non-compliance.

Of those responding in support of current or lower levels some, including, local authorities, commented that fines should be fixed to ensure consistency; reduce risk of challenge; simplify the process; and ensure the maximum fine is not breached.

Of those who were opposed completely or in part, to the use of fines as a penalty, a small number felt that the approach would result in a reduction in PRS housing supply, particularly in rural areas.

Enforcement - some expressed concern about the burden being placed on the already stretched resources of local authorities. Responses also suggested that the system should be based on support, incentives and flexibility to encourage improvements to properties. Others responded that the approach to enforcement should be more closely linked to the process for landlord registration.

In terms of the practical roll out of the regulations a small number sought additional time. This would allow for the undertaking of appropriate works or to secure an exemption.

Specific comments were received regarding the need for more clarity on certain aspects of the enforcement process, with most focusing on the need for a clear understanding of the practical roll out of the process.