Landlord efficiency upgrades may still fall short

Stewart Clements, HHIC

Protecting tenants from cold, damp housing is an important issue that has once again come to the fore thanks to the recent increase to the cap landlords are expected to spend on energy efficient upgrades.

Inefficient properties that are lacking in insulation or a modernised heating system are likely to be wasting energy left, right and centre. Although bills rest with the tenant, since April the responsibility to upgrade technology and structural work to improve properties to band E standards has sat firmly with landlords, who risk exclusion from agreeing new tenancies if work is not carried out.

Of course, a balance is needed to avoid over-burdening landlords but the idea behind upgrading properties so they meet Energy Performance Certificate band E, is a grounded one.

According to 2014 English Housing Survey figures, around 290,000 private rented homes only meet Band F, and therefore fall short of this target. In fact, a National Energy Action report stated that 4 million UK households were unable to heat and power their homes adequately and such high levels of fuel poverty were a significant contributor to 28,584 excess winter deaths in England and Wales each year.

When government works closely with those in the industry, as they have done here, the tendency is to see stronger and better results. There are still discussions to be had, but the HHIC welcomes the announcement that landlords will now be expected to contribute up to £3,500 to upgrade an inefficient rental. A definite step in the right direction, yet we believe that the landlords could do more.

The new funding cap is a marked increase on the £2,500 originally proposed by government. As many improvements automatically cost more than this figure, HHIC ideally recommended that the cap should be set at £5,000, to allow for even wider works to be carried out to improve EPC ratings.

Figures show that the government’s plan to cap spending at £2,500 would help only 30% of affected houses to reach EPC Band E, whereas a cap of £5,000 would lift a substantially higher number to this banding. It is estimated that the higher amount would have reached nearer 60% of properties.

The cap of £3,500 will undoubtedly help more properties. However, when you look at the fact that the average cost of installing a new central heating system can amount to £4,000, it is easy to see how easy it is to exceed the new cap. Insulation alone will not keep a home warm, you need an efficient heating system too.

Gas central heating is the most obvious solution but we may see installations being avoided in the worst performing properties as costs fall outside the cap.

A further discussion is also required on the inclusion of eco funding within the cap limits rather than being in addition to monies provided by landlords. Allowing it to be considered over and above the cap would inevitably ensure more efficiency work could be carried out.
Aside from the debate on the numbers, this decision does open up a wider discussion on the duties landlords have to their tenants. The amount that tenants pay for rent is often their largest outgoing, yet it is one of the least regulated markets in the UK. Minimum standard regulations currently provide a grey area.

Exemptions, such as not carrying out work if a tenant refuses to consent, can leave the door open to abuse of the system with tenants feeling pressurised into disallowing work.
HHIC believes that like every business and service provider, landlords should be regulated by similar laws to every other market in the UK as this would prevent cold and damp homes from entering the rental market.

There is still some way to go before we see wholescale efficiency upgrades to the rental housing stock, but it is encouraging that voices from within the heating industry are being consulted and considered in this decision-making process.

It will be interesting to see the impact this higher cap has on efficiency levels, and whether there is need for further amendments to make this efficiency initiative even more effective.