The Role of the Private Rented Sector in Energy Saving Goals

As outlined in the Kyoto Protocol of 1997, the EU committed all its members, including the UK, to a reduction in greenhouse gases.  However, the UK Government has only paid lip service to this agreement.

Even the recent (2021) G7 agreement to:-

‘Protect our planet by supporting a green revolution that creates jobs, cuts emissions and seeks to limit the rise in global temperatures to 1.5 degrees. We commit to net zero no later than 2050, halving our collective emissions over the two decades to 2030, increasing and improving climate finance to 2025; and to conserve or protect at least 30 percent of our land and oceans by 2030. We acknowledge our duty to safeguard the planet for future generations.’[i]

has no definitive plan of action to meet this bold promise.

Cynically, we could point to the fact that it is easy for a 5-year Government to agree to a plan stretching over the next 30 years, as most (if not all) of the architects will have long retired.

Background

There has been a lot of activity, but insufficient end result; in chronological order:-

  • 1997 – UK signed up to the Kyoto Protocol, as part of the EU
  • 2002 – UK commit to an 12.5% reduction in emissions relative to a base year made of 1990 and 1995 data for the target period 2008 to 2012.
  • 2004 – LESA* (Landlord’s Energy Saving Allowance) commences, a form of capital allowance enabling landlords to claim the cost of certain energy-saving items
  • 2005 – the Kyoto Protocol, signed 1997, comes into force
  • 2006- Low Carbon Building Programme (LCBP)* introduced. Used as a mechanism to encourage the use of low energy bulbs, and extend insulation, especially loft insulation
  • 2006 – Carbon Emission Reduction Target* (CERT) introduced. Imposed a target on the gas and electricity transporters
  • 2007 – UK commit to a reduction target of a 20% emission reduction by 2020 compared with 1990 levels (base year)
  • 2007 – Home Information Packs* introduced, including Energy Performance Certificates (EPC’s)
  • 2008 –a specialised department formed (the Dept of Energy and Climate Change* – DECC). Previously all these matters had been handled by DeFRA (the Department for Environmental Food & Rural Affairs)
  • 2008 – Energy Act enabled
  • 2009 – Full Home Information Pack no longer required, only the EPC is a legal requirement
  • 2009 – Community Energy Saving Programme* (CESP) introduced. Was an obligation on large UK energy companies to deliver energy saving measures to low-income households
  • 2010 – Low Carbon Building Programme (LCBP) cancelled due to budget cuts
  • 2011 – Renewable Heat Incentive (RHI), a government financial incentive to promote the use of renewable heat, introduced as part of the 2008 Energy Act
  • 2012 – the Green Deal* launched
  • 2012 – CESP ceased
  • 2013 – Energy Company Obligation* (ECO) launched to replace CERT. Obligates the larger energy suppliers to help lower-income households improve their energy efficiency
  • 2015 – Green Deal funding discontinued, due to low take-up
  • 2015 – LESA discontinued due to funding restrictions
  • 2016 –DECC merged with BEIS (the Department for Business, Energy & Industrial Strategy)
  • 2017 – ECO ceased
  • 2017 – Green Deal Finance Company* acquired by private Equity Company
  • 2018 – Minimum Energy Efficiency Standards (MEES) commence for new rentals – only property with an EPC rating of E, or better can be let
  • 2020 – MEES applies to all rental property
  • 2020 – Local Authority Delivery scheme (LADs) introduced. A grant available to Local Authorities to raise the energy efficiency of low income and low energy performance homes
  • 2021 – Green Home Grant ceased (with 4 days’ notice) due to poor take-up
  • 2021 – Green Deal Finance Company ceases trading

* all these have been cancelled/discontinued.

So, as can be seen, many commitments have been made, but practical efforts to meet these have been ill thought out, and generally cancelled.

Even the one to remain (Minimum Energy Efficiency Standards (MEES)) can run into problems where a property is in a Conservation Area, and the local officers will not allow any change to help an energy rating, even if the change could be sympathetic to the property/area.

Planning

It is recognised that no-one wants inappropriate building work to be carried out.  This is especially true in an area that has been designated as worthy of special protection by being made a Conservation Area.

Historic England states:-

Conservation areas exist to manage and protect the special architectural and historic interest of a place – in other words, the features that make it unique. Every local authority in England has at least one conservation area and there are around 10,000 in England.[ii]

stressing the need to retain architectural interest.  So, unless the actual property is further protected by being listed, it is frequently possible for works to be done sympathetically, especially for the installation of double glazing.  But so often we are hearing that Planning Officers will not allow any work, on principal, without even bothering to investigate whether the work will actually have a detrimental effect on the building and the area.

Double Glazing

It is a shame that they do not have an obligation to signpost acceptable alternatives and there is no VAT relief for what are usually expensive secondary glazing, while businesses are able to reclaim VAT when replacing rotten timber windows with uPVC[iii].

Cladding

Whilst cladding was only partially for energy efficiency, and partially for aesthetics, Government failure to act fast enough with incomprehensible funding for buildings over 6 storeys leaving landlords and homeowners with properties they cannot sell or re-mortgage and massive bills.

Alternative Heating

The Government is happy to promote solutions, such as Thermal Solar and Air or Ground Source Heat solutions. These are fine where the layout of a property permits, but also depend on a level of user knowledge to operate and maintain them which it would be unrealistic to expect from many of our tenants.

 

We need simple, robust solutions which are cost-effective, both to instal and to maintain. Our tenants do not want to be stuck without heating or hot water because a suitably qualified tradesman, familiar with our set-up is not available.

 

That’s not to say we are averse to all technology or new energy saving solutions in our properties. Landlords were early adopters of combi boilers (space saving and no water tanks) and many tenants no longer suffer with condensation and damp due to the installation of trickle HRV (Heat Recovery Ventilation).

 

We are also fitting infrared heaters (great for bathroom mirrors) and the latest generation of high efficiency boilers and heating controls.

 

Local Authority funding

The Government has made grants available for Local Authorities to raise the energy efficiency of low income and low energy performance homes (those with energy performance certificate (EPC) ratings of E, F or G, although Band D is also in scope in Phase 1B), including off-gas grid homes.

 

This is generally only available to owner-occupier properties, but sometimes can be made available to rental property.

Summary

Housing represents the 4th largest source of carbon emissions in the UK (14%[iv]) and PRS is 20% of housing and has the highest concentration of fuel poor tenants (17.7%[v]), so with our less efficient stock we probably represent 3-4% of all emissions.

The uplift from E to the likely C would be expected to half this figure in less than 10 years.  Note, however that the bulk of rental properties are rated at less than EPC Band C (around 67% of PRS homes[vi]).

Our Recommendations

 

  • Consultation
    • Continue the consultation of all interested parties on potential methods to reach net zero carbon in housing, including the PRS and Social Sector, started in 2020
    • also, arrange a conference to discuss openly
  • Government
    • re-instate a Government Department, and a Secretary of State (i.e. to sit on the Cabinet), rather than a lower lever Minister, as at present. With a clear remit including providing clarity on replacements to carbon based heating and hot water
    • have a junior Minister with the brief to improve the PRS
  • Financing
    • most measures have been pulled due to budget cuts. Why not raise ringfenced finance with Climate Change Bonds, which would appeal to current trend for ESG (Environmental Social and Governance) investments.
    • Also, why not index to the carbon target, so interest rate increases fall, rewarding the Government for meeting its targets?
  • Planning
    • amend the Planning Act to default to works being allowed in a Conservation area, unless the Conservation Officer can prove the proposal would have a detrimental effect on the building/area
  • Taxation
    • re-introduce LESA (Landlord’s Energy Saving Allowance) – or equivalent, to incentivise landlords to carry out work to meet their requirements under MEES
    • VAT relief on fabric focussed measures such as wall, roof and floor insulation
  • MEES
    • release consultation findings/decision on domestic properties at earliest possible date

 

 

[i] https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/13/carbis-bay-g7-summit-communique/

[ii] https://historicengland.org.uk/listing/what-is-designation/local/conservation-areas/

[iii] https://practicebusiness.co.uk/10-surprising-things-you-can-reclaim-vat-on

[iv] https://www.theccc.org.uk/publication/uk-housing-fit-for-the-future/

[v] https://www.gov.uk/government/collections/fuel-poverty-statistics

[vi]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/946175/prs-consultation-2020.pdf