Energy efficiency 'U-turn': Tougher rules to force more landlords to upgrade homes

November 5, 2018

Government tweaks MEES rules to require more landlords to install energy efficiency measures, but campaigners warn some of the coldest properties will still be exempt

 

More landlords of the draughtiest homes in England and Wales will likely be required to upgrade their properties after a tweak to energy efficiency rules was announced today by the government.

 

Since April this year, landlords who own the lowest rated properties for energy efficiency - known as bands F and G - have been required under law to install upgrade measures or they are not allowed to rent the property to new tenants. Landlords flouting the rules could face fines of up to £5,000.

 

These Minimum Energy Efficiency Standards (MEES) rules apply initially to new tenancies or contract renewals, but by 2020 will apply to all domestic rented properties on the market and by 2023 all commercial properties.

 

However, the government had previously faced criticism from environmental and fuel poverty campaigners, after proposing that landlords facing energy efficiency upgrade costs of more than £2,500 would be able to register for an exemption from the standards - effectively leaving their tenants in cold and inefficent homes. Initial draft proposals had set the cap even higher, at £5,000.

 

Ministers today responded to this criticism, announcing that the cap on upgrade costs will now be raised to £3,500. The move means fewer landlords will likely be able to apply for exemptions, and will instead have to pay up to £3,500 of their own money towards upgrades, such as improved insulation.

Today's measures, which follow a recent public consultation, will come into force during 2019 and affect around 200,000 landlords, the government said.

 

Energy and Clean Growth Minister Claire Perry said the new measures would help save on household energy bills, while reducing carbon emissions and potentially increasing property values. She cited analysis showing the cost to the landlord of upgrades would be more than offset by the increase in property value.

 

"Upgrading these homes so they are more energy efficient is one of the most effective ways to tackle fuel poverty and help bring down bills for their tenants, saving them £180 a year," she said in a statement. "Everyone should be protected against the cold in their own home and today's announcement will bring this reality closer."

 

The changes mean that next year properties with an Energy Performance Certificate (EPC) rating of F or G, the lowest two ratings available, must be raised to at least an E rating by landlords before they can be put on the rental market for new tenancies.

 

Landlords can also access funding mechanisms to help with the costs, such as through the Energy Company Obligation (ECO) scheme.

 

The government said it expected required upgrades to cost landlords £1,200 on average - far below the upper ceiling set by today's rule changes.

 

However, writing for BusinessGreen  last week, chair of the British Energy Efficiency Federation (BEEF) Andrew Warren, pointed out that initial draft government proposals had in fact set the landlord cost cap at £5,000 - which he said would have ensured that close to half of all rental homes rated F and G would have been upgraded.

 

Nevertheless, the reach of the MEES rules is significant. The standards are expected to affect 290,000 properties, which represents six per cent of the overall domestic private rental market.

It follows pressure from campaigners which had previously called on the government to raise the spending cap that would exempt landlords from the requirements.

 

Peter Smith, director of policy and research at the National Energy Action group, said today's announcement marked an improvement on the MEES rules, but suggested many landlords of the least inefficient homes would still be let off the hook from delivering much needed upgrades.

 

"Whilst there has been some improvement to the previous proposals, seven years after Parliament voted to address this scandal; the vast majority of private landlords are still going to be able to rent out properties which are dangerously cold and damp," he said. "The government themselves admit just over 30 per cent of the least efficient homes will be improved up to the 'minimum standard' and in England alone over 35,000 households will still be left living in the deepest fuel poverty trying to keep properties warm that are impossible to heat."

 

A recent report by the International Energy Agency (IEA) estimated that a global drive towards greater energy efficiency could single-handedly deliver a cut in overall greenhouse gas emissions even as the economy grows between now and 2040.

 

In related news, ScottishPower today estimated 14,000 homes in Scotland are still reliant on coal as their primary heat source, prompting calls from campaign group WWF Scotland to ensure the use of coal as a primary heat source is tackled as soon as possible.

 

"It's really saddening to learn so many homes in Scotland are still forced to rely on dirty coal as the main source of heating," said Gina Hanrahan, head of policy at WWF Scotland. "We know ending our use of fossil fuels is not only good for the environment, but also for our health. Heating our homes and buildings accounts for around half of all our energy and climate emissions."

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