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

Doing the work

Questions 2 and 3 asked for views on the current range of support which is available to help private landlords and tenants to improve the energy efficiency of their properties and reduce their fuel bills. In terms of financial support from the Scottish Government this includes loans from Home Energy Scotland (HES), Resource Efficient Scotland (RES), Home Energy Efficiency Programme for Scotland (HEEPS) Area Based Schemes (ABS),the HEEPS Equity Loan Pilot, and Warmer Homes Scotland.

As well as funded support, private sector landlords and tenants can get free and impartial advice from Home Energy Scotland (HES) on energy saving, renewable energy and access to funding, including access to schemes provided by the UK Government.

In addition, Scottish Government intend to introduce a new tailored financial loan product for the Private Rented Sector and the question sought opinion on how such an incentive might help improve the energy efficiency of properties in the private rented sector.

Question 2

What are your views on the existing mixed nature of support (financial and advice) available to landlords and tenants? Include any additions or changes you think would assist.

39 respondents answered Question 2. The question was open, seeking opinion and suggestions.

Generally, whilst existing support is acknowledged, most felt that, more support would assist in the delivery of the regulations.

Financial aid

Regarding financial aid, respondents suggested that the key to the success of any support programme is adequately budgeting to meet any increased demand which arises as a result of these regulations. As a way of managing this it was also suggested that the support which is available should be targeted at the worst properties first.

Loans – Many respondents considered there to be a need to broaden the existing loan funds to cover all landlords, or a dedicated PRS loan fund. Simplifying the application process was also suggested as something which might help landlords engage and speed up the process.

A number of suggestions were made to target funds towards particular types of property, as follows:

• targeting of the more expensive measures needed to reach EPC bands B and A to help deliver the overall outcomes of the regulations;
• targeting towards those proposing a whole home/building approach, particularly where this includes multi occupancy buildings, which should include communal areas and the cost of retrofit co-ordinators; and
• targeting properties in rural areas and off grid properties where rental incomes are lower and so, costs to the landlord, higher overall.

A small number of respondents highlighted the limitations of loans, as a further debt associated with their business/estate, noting that this should be kept in mind when considering how best to achieve the aims of the regulations. It was suggested that a reasonably priced finance product at favourable fixed term interest rates secured against let property, and made available to landlords with large portfolios may assist.

Grants – A small number saw the availability of grants as the only real way to ensure the regulations are delivered.

Respondents suggested linking grants to loan funds while another suggested encouraging links between social enterprises and the private rented sector to gain best value from available grants and to reach as large a number of buildings as possible.

Tenant-led grants were seen by some as problematic and confusing, particularly in terms of liability, and gave the landlord less control over the works being carried out. Linked to this one respondent suggested that Warmer Homes Scotland grants should be extended to assist low paid workers and the elderly, with those who just miss the pension credit threshold noted as being at particular risk. Another suggested a change to this form of grant to tackle properties where there is a regulated tenancy and costs will never, as a result, be recouped by rent increases.

One voluntary/charitable organisation also considered the need for financial assistance for tenants in the event enforcement action is taken.

Fiscal incentives – Tax incentives were cited by a small number of respondents as a way to incentivise compliance with the regulations. Changes to VAT rules were also suggested as an option.

Other funding options – As an alternative to the suggestions above, one respondent suggested an option to allow landlords with large portfolios, particularly where these are historic/traditional to commit to a programme of work over an agreed period of time, rather than forcing them to act within the prescribed timeframes. A further respondent suggested making the payment to the contractor, rather than the landlord, to smooth issues in the supply chain and reduce the need for the landlord to find funds up front.

Advice service

Some respondents noted the need for increased capacity within existing advisory services, to meet the increase in requests which will come as a result of these regulations. Linked to this, it was suggested that there was a need for additional support for local authorities, most notably linked to training regarding their role as enforcement authority.

Improved web information was also suggested by a small number, targeted at the hard to reach, who are often landlords with single properties, with a focus on particular building types.

Some suggested building on existing communication networks with a high profile marketing campaign to raise the profile of the regulations and ensure landlords understand their obligations and what support is available. Examples suggested include:

• private landlord forums;
• a private landlord support officer model piloted already in some areas of Scotland;
• enhanced HES advice services to include
  • Development of the existing HES PRS advisory role;
  • Improved advisory service specifically regarding traditional and historic properties;
  • Improved advisory service specifically regarding shared ownership blocks;
  • Tailored advice by house type (which requires research);
• a government led associative body or database was suggested as a way to increase knowledge;
• face to face and in home support particularly in regard to tackling fuel poverty; and
• a publicly owned service to co-ordinate existing and future advice providers. As a minimum all forms of support should be made available through a centralised portal, for example under Resource Efficient Scotland (RES).

A small number note the need for care in the role out of advisory services and the link up to owner occupier standards and roll out of much wider standards across the whole of the building stock. A joined up approach is needed to ensure success.

The quality of installers was also noted as having problems, with contractors not correctly installing measures which can result in damage to the property affected.

A number of suggestions were made about specific measures which may help landlords understand what is available and what is needed, as follows:

• an options appraisal report which would allow real costs of energy and measure to be fully accounted for, these being linked to the various EPC bands to allow landlords to make informed decisions about investment;
• an amendment to the information provided in home reports is also suggested as a way to raise the profile of the regulations and routes to advice;
• advice and support with surveys and installers would assist; and
• advice which promotes a whole building approach in an effort to reduce the risk of smaller measures being taken which will require further updating in the future.

Some respondents suggested that advisory services should also be promoted with tenants, possibly through their tenancy agreement, with suggestions including the following:

• tenant rights;
• information on behaviour change;
• educational information on the benefits of energy efficiency measures. This is important where measures are being installed to ensure the best outcome for the tenant in terms of gaining efficiencies and reductions in energy bills; and
• enforcement rights and clarity on the role of the First Tier Housing Tribunal for some tenant issues, and the local authority for others.

A number of specific advisory measures are suggested by one local authority as follows:

• extending the tenement management scheme to include energy efficiency improvements which enable properties to meet the standards set in the regulations
• revise the model Private Residential Tenancy agreement to include reference to minimum energy efficiency performance standards
• strengthen the guidance to require that any non-compliance with the regulations is immediately referred to Landlord Registration teams to review if the landlord is 'fit and proper'

Local Authority respondent

One respondent called for caution, concerned that increased demand within the supply chain would result in a reduction in quality of suppliers. They considered that advisory services must be alert to this in the advice they give.

The guidance associated with these regulations was suggested by a small number as a first 'port' to provide additional information which can then be used by advisors and landlord registration teams to point landlords towards help. It was noted that there is more information available in the consultation document which was not contained in the guidance document. Information should also be included within the information on landlord registration provided by local authorities.

Other issues raised

The previously mentioned perceived limitations of the EPC was raised by some respondents, the view being that the resolution of this problem would go a long way to encouraging landlords, particularly in rural areas, to install appropriate energy efficiency measures, thus delivering the objectives of the regulations.

A number of specific issues were also been raised and these are as follows:

• the need to ensure costs incurred by landlords are not passed on the tenants, and seek, from the Scottish Government, methods to ensure this. This is also true of the risk of eviction as a result of the need for long and invasive works within a property;
• the risks associated between lack of available funding and requests for large numbers of exemptions;
• the need for an extended lead in time to help manage increased demand for both finance and advice, and allow landlords sufficient time to be clear on the requirements of the regulations; and
• the need to understand the unintended consequences of the regulations being to reduce the overall supply of PRS stock or a high percentage of exemptions.

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

Question 3

How would the changes you suggest influence the speed with which you would expect improvements to occur?

34 respondents answered Question 3. Generally, respondents were of the view that if their suggestions, made under Question 2, were taken up, this would aid the speed of improvements. They felt this should start with the suggested changes to improve clarity in the formal regulations and associated guidance, as raised in connection to other questions in the consultation.

Financial

Regarding financial assistance, a number of specific additional points were raised, as follows:

• any financial support should be time bound to act as an incentive;
• loan options to be extended to cover all PRS landlords;
• an adjustment to the HEEPS ABS scheme would speed up the completion of improvements; and
• an improved/simplified grant/loan application process would speed up the process and encourage co-operation.

A large percentage grant was suggested by a small number as a way to speed up works. This could be coupled with tax and other fiscal incentives and concessions. Other respondents considered the provision of financial incentives as a route to speeding up the process.

Advisory

If the advisory service was improved there was a general view that this would accelerate the process and help landlords and tenants understand what is required.

It was also felt that improvements to the current service should focus on clear and concise advice, thus avoiding confusion. Improvements to the current service should also include building in additional capacity and tailored advice providing help to educate landlords on the best options In line with points raised in regard to question 2, if this included whole building advice, this would improve the quality of overall improvements.

Promoting available services would improve take up and knowledge of regulations within the sector. Without this a small number considered compliance with the regulation would be low.

As mentioned above in answer to question 2, the availability and knowledge of assessors was considered by some to be crucial to the successful roll out of these regulations. It was felt demand will increase as a result of the regulations, and this must be matched by an increase in skills and knowledge.

A small number considered that specialist advice regarding historic and traditional buildings was urgently need. However this was not considered likely to speed up improvements, but would ultimately improve the quality of works installed.

Other

A small number considered that works should be prioritised based on the best fit for tenants, the best fit for landlords and their finances, and on landlord management of their portfolios, rather than on forcing landlords to seek exemptions. A small number suggest agreed long term improvement programmes agreed between landlords and enforcement authorities would be a solution, particularly in rural areas where landlords may have large portfolios of sub-standard stock .Linked to this is the need for the approach to recognise that not all properties are the same, and some flexibility is needed if the aims of the regulations are to be realised.

One local authority raised a number of specific points regarding their role as enforcement authority as follows:

• the process seems to focus on ensuring compliance rather than the burden being on the landlord to comply;
• should local authorities contact all relevant landlords to begin the dialogue;
• should local authorities investigate compliance during investigations into other tenant enquires;
• should local authorities undertake a sample to ensure compliance;
• the process of seeking information to confirm compliance appears complex and time consuming;
• a link between the EPC register and landlord register would be a good starting point to assist in identification of non-compliant properties and could tap into the existing options for email reminders which are built in to the Landlord registration system; and
• a centralised exemptions register is also suggested as a way to save time within individual local authorities.

A number of additional points were made by individuals, as follows:

• the introduction of the regulations will help drive improvements in the sector;
• high penalties may encourage improvements within the sector; and
• the process should include the introduction of a regulated system for contractors and suppliers to drive quality in the supply chain.

A number of points raised elsewhere are also repeated here, as follows:

• the unintended consequence of these regulations could be causing a reduction in the PRS stock;
• the use of EPC and the need to address this issue if confidence is to be built; and
• the ongoing conflicting agendas between improving energy efficiency and fuel poverty.