The private rented housing market is growing massively – nearly doubling in a decade in fact. From our point of view, the sector contains some really good homes in terms of energy efficiency, like the spanking new flat developments that popped up in recent years, but also many of the worst homes. There is a much higher percentage of G rated homes than in other sectors.
Another problem is that it’s historically been a neglected sector in terms of improving energy efficiency. A major sticking point here is what’s known as the ‘split incentive’ – the problem that landlords don’t want to pay for energy efficiency measures when tenants reap the benefit from lower fuel bills.
There’s also the fact that incentives for landlords, both carrot and stick have existed before now, but they’ve either had low take-up or not been as well enforced as they could be.
There’s the Landlords Energy Saving Allowance (LESA) which enables landlords to claim up to £2,000 per property for fitting insulation. This has had very low uptake. Why? Well there’s no study been done, but some reasons might be that landlords just aren’t interested because of the split incentive, because they own flats and cant install the measure without others agreement, or because they’ve got solid wall homes that cost a lot more than £2,000 to treat.
Even the landlords who do install insulation probably don’t claim LESA because they wrongly think insulation – like double glazing – is a maintenance cost that can be offset against tax anyway.
Meanwhile the stick of environmental health legislation could be used against landlords who let out dangerously cold homes. But there’s turned out to be lots of enforcement problems. Firstly, there’s still no real consensus about how to identify what is a dangerously cold home. Secondly, tenants may be worried about being evicted if they complain about their landlord to local authorities. Thirdly, even where authorities do take action against landlords over cold homes – often the landlords have been able to get the decisions overturned at residential property tribunals – who have proved suspicious of strong action on energy efficiency.
Things are changing. The Green Deal should be great for the sector as it solves the split incentive – offering a way for the tenant to pay for the improvement as they’re benefiting from it. But even with the Green Deal government has recognised that not all landlords are going to be motivated to act to improve their homes.
It’s for exactly that reason they introduced a plan to restrict the renting of the least energy efficient homes was included in last year’s energy bill. From 2016 tenants will have the right to demand that landlords undertake ‘Green Deal-able’ works.
From 2018 landlords will be restricted from renting out the least energy efficient – typically F&G – homes. All this suggests that we are finally on the verge of a game changer for the private rented sector.
In the complex field of mass retrofitting, there always tends to be a ‘but’ sneaking into the equation and it’s no different here.
The 2016 and 2018 regulations are driving some early action, but those dates are still some way off. We think they’re a good step. It’s a frustrating message to give to tenants that they will be able to get their landlord to install that new boiler….. but not for another four years.
And there’s still some uncertainty about what the detail of the regulations will look like, for example how many exemptions will there be (e.g. for listed buildings). All in all, it’s a little hard to see landlords acting en-masse before greater clarity is in place.
And some more of those buts: how much work will be Green Deal-able? Will expensive to treat homes, which may the worst homes in the sector qualify for all the work they need under the Green Deal – or will it be so expensive that the sums don’t add up? And will landlords and tenants – who both need to work together to get Green Deal – really collaborate? Will everyone in blocks of flats agree to take energy efficiency seriously?
Enough doom and gloom. In relation to targeting the fuel poor and those at risk of being, areas most in need of support will be targeted through ECO, which is being rolled out alongside Green Deal. Private landlords must be central to ECO schemes.
We think that LESA could be extended to cover a wider range of measures, perhaps particularly in homes where the Green Deal/ECO isn’t suitable – for example large-scale upgrades to heating systems. There’s also the potential for DCLG to refocus on making best use of that environmental health legislation in the run up to 2016/2018, to get into the very worst and coldest homes and tackle neglectful landlords.
Houses in Multiple Occupancy (where people share kitchens or bathrooms) house some of the poorest people in our society.
Yes, it’s clear there’s a lot of hard work ahead – but we’re confident it’s doable. What’s really encouraging is that lots of landlords are excited: the hugely popular “Property Tribes” website’s thread on the Green Deal is the most popular on the site. It’s great to see users there discovering ways we can offer help and support for the first time.
Landlords associations are engaged in making this happen. As part of our new European REQUEST project we’ll collaborating with the British Property Federation to provide some new information to landlords about the potential to improve different types of property.
What’s more, the issue of including the private rented sector more in a national approach to retrofit is developing serious political momentum, with the Committee for Energy and Climate Change writing to Greg Barker on this issue just last week.
All in all, there’s great potential for us to enter a new era which will see the least energy efficient homes in the private rented sector tackled, but it still all needs to add together: particularly for the poorest and most vulnerable tenants in private rented homes in the worst condition.