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

Cost Cap

Question 4 considered the need for landlords to take action in advance of the regulations coming in to force, and sought views on what impact this might have on costs and the ability of landlords, through Regulation 12, to secure an exemption based on excessive costs of works (a cost cap).

Question 4

We propose that 6 months in advance of the Regulations coming into force local authorities should take account of expenditure outlay on measures which are intended to meet the standards set.

Do you agree that this is a reasonable lead in time period? If not, what alternative lead in time would you propose?

What information would you expect to provide to local authorities to seek an exemption based on the cost cap proposed?

6 Month Lead in Time

In total, 34 respondents commented on Question 4. There was wide 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 with the majority welcoming this approach. The responses were split when considering the timeframe for such work. Half of those who commented on the timeframe support a 6 month period considering this to be sufficient to allow works to proceed in advance of the standard coming in to force. Of these, the majority were local authorities, the remainder comprising, in the main, professional and voluntary bodies. Some reasons given to support a 6 month period were that:

• the lead in time will help avoid dis-incentivising landlords from being proactive in upgrading their stock in advance of the standard coming in to force; and
• it links with the close of the consultation period on the draft regulations which is approximately 6 months in advance of the regulations coming in to force.

Those supporting a 6 month period did however note a number of concerns which, they felt, should be qualified in guidance associated with the regulations. Some such concerns included:

• the need for a comprehensive communications and awareness raising campaign by Scottish Government to trail the introduction of the regulations;
• the work carried out in this period must be relevant to the standard, provided by reputable companies and the information supplied to support this must be valid;
• the need for discretion by the local authority regarding the dates of receipts, particularly where local authority areas contain a large portfolio of PRS stock;
• availability of assessors and suppliers as demand grows in advance of the regulations coming in to force;
• the need for this approach to be embedded in the regulations; and
• that this approach be extended to include a lead in time for the higher standard of Band D.

The other half of those who commented, mainly individuals, housing providers, landlords and their representative bodies, on the timeframe considered 6 months to be too short a period with many suggesting a period of at least one year.

Some reasons given to support an alternative to a 6 month period were that:

• the introduction of a new process will put an additional burden on local authorities which may take more than the suggested timeframe to settle down, allowing local authorities to fully engage with landlords, provide the required level of advice on requirements and process information supplied;
• there is a shortage of skilled suppliers, particularly in rural areas and waiting lists can run to over a year;
• landlords with large portfolios may have difficulty meeting the standard across all their stock within the timeframe suggested;
• the 6 months preceding the regulations coming in to force runs between October and end March, during which time work is often delayed because of weather;
• current communications around the introduction of these regulations is inadequate at present and there is a need for a more robust approach lead by Scottish Government;
• a period of at least a year better reflects the time taken to seek quotes, agree contracts and complete works needed using the existing supply chain; and
• the use of a 6 month timeframe will dissuade landlords from carrying out structured and constant investment in their stock.

The majority of those suggesting a period longer than 6 months considered that the practicalities of carrying out work was not being adequately taken into account. This included impact of supply chain, lack of clarity on the works required in the lead up to the regulations coming in to force, the impact on tenants, and the need to plan work over a longer period. For example:

'Some improvements (eg double glazing or new heating) might be better carried out when the property is vacant and a 6 month period might not be long enough.'

Organisations – voluntary/charitable respondent

Required information in support of a cost cap exemption

The majority of those who responded to this question suggested that written evidence be supplied by impartial/independent suppliers or consultants or from recognised support agencies such as Home Energy Scotland.

A small number recognised that landlords with large portfolios, at times, have in-house building and repair teams and wished their experience and ability to provide quotes to be recognised. The use of a trusted trader type approach was also suggested, as was the use of technical experts to support local authorities in their review of information supplied.

Some expressed concern regarding the nature of information to be supplied, as EPC recommendation reports already include cost estimates. They expressed the need for clarity on the precise nature of the cost estimates and from whom they should be provided.

Some suggested that associated guidance should include clear information on the parameters of cost and works, mentioning the need for clarity on the following:

• redecoration;
• VAT;
• ancillary costs;
• availability of grants and loans;
• associated costs linked to but not providing energy efficiency such as replacement of rotten timbers;
• the need for temporary rehousing of tenants;
• the difference between costs per energy efficiency measure and combined cost;
• expenditure to reach Band E and then D and the option to seek a cap based on the combined costs;
• the need to undertake some works, despite that work not securing an improvement in the band to the required standard; and
• the need to seek advice from HES on the most cost effective way of gaining improvement.

While the majority agree on the need for quotes as noted above, some consider that the need for 3 quotes was not reasonable, particularly noting limitations with the supply chain to seek and secure such quotes. For example:

'We have received some feedback suggesting that it may be difficult for landlords to receive three quotes for work and that this approach may not be welcomed by tradespeople who may be reluctant to provide quotes if they think it is unlikely to result in a job.'

Professional body

Other forms of exemption

Within the responses to this question, a small number of respondents expressed views on exemptions other than the cost cap.

Regarding Consent exemptions, a small number suggested evidence supplied in support should take the form of written evidence and confirmed by the local authority seeking direct access themselves where this is not possible. The tenant should also be able to contact the local authority to confirm they do not wish works to be undertaken.

Other issues raised

A number of other views were expressed, which, while not directly in answer to the question posed, are important to capture, and were made by one or a small number of respondents, as follows.

• concern regarding the use of EPC to measure for both the standard and the associated costs. Concern was expressed regarding the methodology behind the EPC to measure for the standard with landlords undertaking recommended work to find no improvement in the EPC rating as a result;
• the need to review the cost cap value in the future to take account of inflation;
• the need for additional support within local authorities to carry out the work associated with these regulations;
• the issue of properties within scope of the regulations and need to absolute clarity, particularly where there may be conflicting legislation and standards already in force; and
• issues associated with penalties which will be captured under the analysis of question 5.