It's time to make sure all landlords play by the rules

October 29, 2018


We're not making sure landlords comply with even the most basic energy efficiency rules, argues Andrew Warren


For the past ten years, it has been illegal to rent or lease out any building without providing the occupier with an Energy Performance Certificate (EPC), together with a detailed energy improvement survey.


From this April, officially nobody is able to rent or lease out any building with an EPC energy rating below an E. Those with F and G ratings are simply unlettable.


Cause for celebration? After all, one of the biggest barriers to improving the energy efficiency of the building stock has long been the split incentive between the occupier and the owner. Normally, the former pays the fuel bill. But, given the short lengths of leases, has little incentive to spend to improve a building owned by somebody else.


That is why EPCs for tenants were introduced. That is why, within the first year of the Coalition government, a law was passed stating that minimum energy standards will become mandatory in rented properties. 


Sweetheart deal for landlords

The very long, seven year, gestation period was intended to ensure landlords had plenty of notice to make any necessary improvements; inevitably as the start date grew closer, the more protests of prior ignorance about such "draconian" requirements were enunciated.  


And I fear, listened to by government. So much so that at the last minute it was conceded that the maximum amount needed to be spent upgrading any property, no matter how large, to minimum standards would be halved. When the relevant public consultation had been launched, the proposition from government was that if you had to spend more than £5,000 bringing the building up to an E rating, you would be excused from doing so. This would have ensured that approaching half of all homes rented currently with F or G ratings would have been improved 


That requirement has now been halved, to just £2,500 per premises. And, perversely, included within that ceiling is any third party funding landlords might access, such as via the Energy Company Obligation (ECO) or a Green Deal financial package.


Serious lost opportunity

The result of this absurdity is clear. On the government's own estimates, less than one-third of those buildings currently rated as Fs or Gs will be likely to be upgraded thanks to this legislation, even to the modest E standard.. Given that it is now government policy to seek to bring every home up to a C standard within the next 17 years, this really is a serious lost opportunity.


What is so perverse is that this upgrading requirement is really far from onerous: research by Parity Projects confirms that the average cost of bringing F and G properties up to Band E is only £1,421, with more than 70 per cent of properties able to reach Band E for less than £1,000. 


Implementing this law is the only new energy saving initiative for the buildings sector since 2015. This is even though approaching half of all energy consumption in the UK is in buildings. So why government should be officially reckoning that this flagship policy would be so relatively ineffective is, on the face of it, puzzling.


I suspect that the clue may be found in a little-noticed Parliamentary Answer provided last November for the indefatigable Green MP for Brighton, Caroline Lucas. She had asked about levels of compliance with acquiring EPCs for rented or leased properties.


The then Housing minister, Alok Sharma, responded perfectly reasonably that "compliance with Energy Performance Certificate requirements is checked by local trading standards' bodies".


But he then went on to reveal "my Department has sought information on the number of enforcement notices issued by trading standards' bodies." 


His suspicion must have been that all those charged with ensuring compliance may simply not be enforcing the law.


Non-compliance by landlords

Effectively, this negligence means that if a landlord is already failing to comply with the initial legislation, to offer a current energy rating to a new tenant, then there will be no trigger point to bother with any thought about ever upgrading it. 


According to government estimates obtained via Freedom of Information procedures, just 26 per cent of domestic tenants are ever informed about the energy rating of the property they are about to inhabit. The rest are being told nothing official about the likely size of their fuel bills.


The figure for compliance with non-residential leases is a bit better - but still only 48 per cent of all transactions comply (again, information acquired via FoI requests). 


Whilst there is no empirical evidence one way or the other, it might be logical to assume that a landlord who has deliberately failed to provide a prospective tenant with such basic legally required information, like an EPC, might also be rather more cavalier than most about minimising how much energy the building wastes. 


No prosecutions to date

To my knowledge, no landlord has ever been prosecuted by any local authority for failing to provide an EPC.  


Mr Sharma promised a full statement on enforcement levels of issuing EPCs "in due course".  That commitment was made almost a year ago. Despite regular Parliamentary Questions from Caroline Lucas,  that statement has still to be made. The conclusions will be published "in due course".


This policy, covering the private rented sector, is the only significant statutory initiative on energy efficiency in the entire buildings sector undertaken since the Conservatives  began governing alone - over 40 months ago.


It should be made obligatory for all landlords obey the laws of the land, to help tenants enjoy lower fuel bills. Rather than just leaving it as an option that only a virtuous minority ever bother to comply with.

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