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Private rented sector energy standards fall short

The government has today published its long awaited consultation on the private rented sector minimum energy efficiency standards.   The “tenants improvements” regulations will give tenants rights to ask for energy efficiency upgrades from 2016, and the “minimum energy standards” regulations will prevent rental of F&G banded homes, where they can be upgraded at no upfront cost to the landlord, from 2018.

The consultation shows a lot of hard work and creativity on the part of civil servants in planning for this new type of regulation. But while the detail is impressive, its hard to see that the fundamentals stack up.

The “tenants improvement” regulations are just improbable. Tenants will be expected to organise an energy efficiency assessment, identify how the full cost of the improvements will be paid for, and then serve a notice on their landlord requiring the upgrade. Landlords will have multiple grounds to reasonably refuse consent, and will likely still be able to threaten an eviction as punishment for a troublesome tenant – the consultation presents a few ideas on tackling retaliatory eviction in this situation but no hard plans.

But the main problem with both the “tenants improvement” and “minimum “E” energy standard” proposals is financing. There is no requirement that the landlord has to put up any funding towards the cost of improvements that will be required under the regulations.  And the proposed alternative sources of funding simply aren’t adequate:

  • Green Deal has failed almost totally to date and there is no evidence of real solutions to its problems. Many measures required fail the golden rule and any attempts to relax the rule would see tenants paying more than they are saving.
  • ECO doesn’t reach the private rented sector: anecdotal reports suggest activity in the sector has been limited to date and that situation is only going to get worse with the cuts to CERO and CSCO, with government’s official impact assessment modelling showing that only 1% of ECO funding* is expected to reach the private rented sector.
  • Local and national grant schemes come and go and can provide no stable source of finance sufficient to enable the regulations to take effect.  This is evidenced by today’s announcement from DECC that the Green Deal Home Improvement Fund grants will be reduced.

The final source of funding proposed in the consultation is tenants’ money.   The government suggests that tenants can oblige their landlords to agree to upgrades by paying for the improvements in the property themselves. But why should tenants be expected to pay to upgrade their landlords’ homes?

Modelling from WWF, UKGBC, Parity Projects and EST has repeatedly shown that the costs of meeting PRS (private rented sector) minimum standards are – for most F&G banded homes – below a few thousand pounds.

We need to get ECO and Green Deal working for the PRS. We need proper government investment in energy efficiency as a central part of our national infrastructure. But we can also surely ask landlords to make some contribution (say a maximum of £2000) to bring their home up to a basic minimum “E” standard of energy efficiency. We should remember that most homes below an E standard have already been officially correlated with homes that pose a health and safety risk of dangerous, excess, cold.

*Source: Future of ECO Impact Assessment, 2014.   P.16 shows 1% of measures going to PRS from each of CERO and CSCO ECO sub-schemes. CERO & CSCO make up the majority of ECO funding. There is no tenure breakdown of how HHCRO funding is spent*