Nearly four-fifths of landlords favour raising the minimum energy efficiency standard (MEES) on rental properties, suggesting that the government’s recent u-turn was counter-productive.
A new survey conducted by the Social Market Foundation – a cross party think tank – has found that an overwhelming majority (79%) of landlords believe they should be subject to stricter energy efficiency regulations. Private sector landlords are in fact more supportive of raising the MEES to grade C than the general population, with only 11% opposed to such a move.
At present, the MEES is set to an E, which means that landlords are allowed to lease their properties if it gets an E rating on energy efficiency. The private rented sector (PRS) is the worst performing tenure for energy efficiency in the UK.
In September, Rishi Sunak scrapped plans to require all landlords to upgrade their properties to at least EPC C by 2028, citing the need to protect tenants from unfair price hikes in rent due to the cost of renovations. However, as the SMF has already highlighted, private renters in England and Wales are on track to waste £1.1bn (£220 per household) on energy that leaks out of their walls and windows.
Some landlords that spoke to the SMF expressed frustration at the uncertainty created by the Government’s perceived indecisiveness are were worried that the goalposts might be moved once more. Others were upset at having spent substantial sums of money on improving their houses, only to discover that was unnecessary.
The SMF found that effective regulation is critical to improving energy efficiency in the private rented sector. Those that have made improvements tend to want to get ahead of regulatory change, while a lack of clarity encourages landlords to delay the decision.
Economic incentives, such as making the costs of insulating a property are tax deductible from rental income, are another way to spur on landlords, the SMF says – but will be difficult to justify to the public, since only a quarter of people would support these incentives being available to all landlords. A better approach would be to improve take-up of existing support – just over a fifth of landlords remain unaware of any such schemes. At present, there are multiple programmes – such as ECO4 and the Great British Insulation Scheme – for which some landlords are eligible.
Among other findings and recommendations from the research:
- Both landlords and owner-occupiers share low trust in the insulation industry
- Local authorities have key role to play in increasing trust: by being ‘one stop shops’ for advice and information, as well as for also publicising ‘success stories’
- Installers should be accredited by government and/or a trade body, to assure consumers of quality of work, reliability and trustworthiness
- Homeowners are increasingly seeing the benefits of insulation, are most incentivised by comfort and health reasons, but need nudges to prompt them to take on upgrades
- Checkpoint reminders – like when one is about to renovate – would keep insultation at the forefront of their minds
- Mandating a higher MEES at point of sale would allow homeowners to get back the costs of insulating, but would be quite unpopular
- government should introduce new financial products with long payback periods such as property linked finance, for those homeowners not eligible for government schemes.
Niamh O Regan, researcher at Social Market Foundation, said:
“British homes are on a dismal trajectory when it comes to improving energy efficiency, and failing to improve the private rented sector is losing an easy win.
Recent government actions seem to suggest that renters can either have energy efficient homes or affordable rents – but this is a false logic. Poor energy efficiency is currently costing them millions. Instead of trying to understand landlords and how they can be motivated to better insulate their properties, the Government would rather kick the can down the road, pushing us further and further from greener, healthier and more net-zero friendly homes.”