News: The minimum standard must not be an option

Less than one-third of those buildings currently rated as Fs or Gs will be likely to be upgraded under a new law. Government is missing a trick
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, together with a detailed energy improvement survey. From the end of next month, nobody will be able to rent or lease out any building with an EPC rating below an E.

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.

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 grows closer, the more protests of prior ignorance about such “draconian” requirements are being enunciated.

And I fear, listened to by government. So much so that it has been agreed that the maximum amount needed to be spent upgrading any property, no matter how large, to minimum standards has been halved. When the public consultation was 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.

All of this means that, on government’s own estimates, less than one-third of those buildings currently rated as Fs or Gs will be likely to be upgraded, 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. 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 a 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 Communities minister, Alok Sharma, responded perfectly reasonably that “compliance with Energy Performance Certificate requirements is checked by 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 be that all those charged with ensuring compliance may not be enforcing the law.

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 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).

While 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.

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”. His successor Dominic Raab needs to publish this by the end of March, to coincide with the new regulations ostensibly outlawing F and G rated lettings.

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

Source: Energyzine