The UK Government has launched a consultation on new energy efficiency requirements in the private rented sector in England and Wales. As research by the TDS Charitable Foundation highlights, these changes will have significant implications for landlords, but will substantially benefit private renters.
What are the proposed changes?
Minimum energy efficiency standards (MEES) were introduced by the previous Government to improve the energy efficiency of properties in the private rented sector. Since April 2020, it has been illegal to rent out a domestic property with an Energy Performance Certificate rating of F or G, unless an exemption is in place.
The current Government has now brought back plans to raise the minimum rating to C. These standards would apply to new tenancies from 2028, and existing tenancies from 2030. According to the Government, ‘this proposal will expect to uplift 52% of private rented homes in England to a new EPC standard.’
The maximum amount that landlords are required to spend attempting to meet the standard, the ‘cost cap’, will be increased from £3,500 to £15,000 under the new proposals, but new affordability exemptions will also be introduced. Fines for non-compliance will be raised from £5,000 to £30,000 per property.
What are the implications for landlords?
The Government estimates that properties will require between £6,100 and £6,800 worth of investment to meet the new standard. According to the TDS Charitable Foundation’s Voice of the Landlord survey, over a third of landlords already struggle with the costs of repairs and maintenance of their rental properties, with 9% specifically mentioning that they faced difficulties meeting energy efficiency standards. There are concerns that landlords will leave that private rented sector when the changes are introduced, due to the high costs involved, or that they will pass the costs onto tenants. However, there is some funding available to support landlords to make energy improvements.
How would the changes benefit tenants?
The TDS Charitable Foundation’s Voice of the Tenant survey showed that 45% of private renters find it difficult to afford energy bills. According to the Government, the new standards will save tenants £240 per year (on average) on these bills, representing an obvious financial benefit.
The survey also shows that, currently, 47% of tenants feel the energy efficiency of their rented property could be improved. This is borne out by the data on the main housing maintenance issues experienced by private renters; one fifth of survey respondents said they had difficulty keeping their home warm, while another fifth said the property has a serious problem with damp or mould. Both of these issues are connected to poor energy efficiency.
Despite nearly half of tenants feeling their home needed energy efficiency improvements, only 43% had requested these improvements from their landlord. The fear of rent increases is a primary factor preventing people from making such requests, but many tenants also think it is not worth asking for improvements, as nothing will be done. However, the survey shows that that when renters do make energy efficiency requests, this can often prompt landlord action. More than three quarters of respondents said they were happy or somewhat happy with the response from the landlord after requesting improvements.
The TDS Charitable Foundation’s survey therefore shows that many landlords are willing to make energy efficiency upgrades to their properties, but, as explored above, the high costs involved may pose serious challenges. When bringing in new standards, the Government needs to ensure that there is adequate financial support available for landlords, in order for the changes to prove successful.
If you would like to have your say on the proposed energy efficiency changes, visit the Government’s consultation here.
