Campaigns Environment, Safety and Standards

The RLA’s Manifesto: Warmer, healthier homes

Energy Efficiency

In just under a year a new legal requirement will be in force for new and renewed tenancies in the private rented sector to have an energy performance rating of ‘E’ or above on an Energy Performance Certificate (EPC). If the property doesn’t meet this standard then it will be illegal to let it for any new tenancies starting on or after the 1st April 2018.

All existing tenancies will need to meet these standards by 1st April 2020.

The private rented sector faces a challenge in meeting the energy efficiency requirements given the age of much of its stock. The English Housing Survey notes that 34% of all homes in the sector were built before 1919 representing a higher proportion than both the owner occupied and social rented sectors. Properties that are this old tend to have solid walls, making insulation much more difficult.

A key difficulty is the funding required for landlords to meet the energy efficiency targets. Nearly, 2 in 3 landlords aspire to keep their properties as energy efficient as possible. However, RLA research has found that of those landlords with properties with an Energy Efficiency Rating of F or G, more than 1 in 3 said that they could not afford the required work to bring them up to a rating of E or above.

If the government wishes to meet its aspirational targets of a C rating by 2030 we feel that more needs to be done to help private landlords to deliver on their ambitions.  To support the delivery of current energy efficiency targets we are asking the Government for tax deductions on any recommendations on an Energy Performance Certificate that a landlord undertakes.

Currently landlords are only able to recoup the cost of energy efficiency works through tax relief if and when they dispose of the property through offsetting the costs against capital gains tax.

The offset only relates to the historic costs as the costs cannot be index linked to allow for intervening inflation between the date the work was carried out and the date of sale.

We don’t feel that this is fair especially when the PRS has been hit with other taxation changes such as the reduction in Mortgage Interest Relief and the increase in stamp duty on second homes or homes for rental. There has also been changes to the Wear and Tear allowance so all of these reductions combined leave less surplus funds to pay for energy efficiency improvements.

This sort of tax relief will help the Government to promote their energy efficiency targets. However, it is not a policy that gives landlords something for nothing because landlords have to pay their share.  What is does do is reduce the risk of landlords having to increase rent which could possibly push poorer households in the PRS into fuel poverty. We do not want to see an increase in tenants having to chose between paying their rent or heating their properties.

Another advantage of allowing recommended improvements to be tax deductible is that it would be self-policing, as the recommendations are made by a qualified energy performance assessor and would also have a directly measurable cost-benefit, as each recommendation comes with an estimate of its contribution to any reduction in energy bills.

It would also support landlords wanting to ensure that their properties are as energy efficient as possible and not just meeting the minimum required standards. As nearly, 2 in 3 landlords have ambitions to ensure their property is as energy efficient as possible.

In September 2015, DJS Research carried out for the RLA found that 88% of landlords would be more likely to invest in energy efficiency measures if they could be considered a tax deductible repair, so we would really encourage the next Government to look at this as a serious policy idea to ensure the sector reaches the minimum standard and possibly higher.

It is important that the incoming Government recognises that since the dissolution of  the Government run Green Deal scheme many Landlords will be confused as to how they can get help, if any to reach these standards. Energy Efficiency has always been a somewhat confusing area of policy for the PRS and the upcoming target will need a concentrated effort from the next Government around both funding and the clarity around EPC methodology.

The RLA has been worried to hear that the Building Research Establishment (BRE) has warned that 100,000 properties have been given incorrect F and G classifications as a result of understating the energy efficiency of homes with solid walls and uninsulated cavity walls.

The RLA are still encouraging their members and  Landlords to work towards the required legal standard before 2018 even though we are calling on the Government to delay the implementation date until the EPC methodology has been consulted on and Government has responded.  As overall this will ensure that the aim of ‘Warmer and Safer’ homes is met to benefit both landlord and tenant.

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About the author

Natalie Williamson

Natalie Williamson

Natalie Williamson is the Senior Policy Officer for the RLA and has worked for the Association since 2013. With almost ten years experience in Housing policy and research since graduating from the University of Manchester in Philosophy and Politics , Natalie leads on the RLAs Health and Safety , Welfare and Fuel Poverty Policy areas.

Prior to working for the RLA Natalie worked for a DCLG appointed National Body for Home Improvement Agencies and worked with multiple Government Departments on policies to enable older people and those living with disabilities to remain independent in their own home. Whilst working here Natalie wrote and had published a good practice guide ‘Supporting People in Private Rented Sector Housing’.

Since taking up her position at the RLA Natalie has worked hard to change the narrative of private landlords by working on research projects on welfare and homelessness and also delivered the RLA Safe and Secure Home to help Landlords achieve safe housing for their tenants.

2 Comments

  • As a non resident landlord this is the first i have heard of this. Could you explain whst i need to do if my rating is low

    • Hi Dennis,

      Many thanks for your comment.

      If you have an Energy Performance Certificate (EPC) check when it was last issued (they last 10 years) and this should tell you your current rating. If you have not got an EPC then we would suggest you get a rating so that you know what you are working towards. You also need one now to give to the tenant when you start a new tenancy so that you are able to serve a section 21.

      If your property comes out at an EPC F or G check first the full list of exemptions that may mean your property does not fall into the MEES legislation. You can find out more about these exemptions here – https://www.rla.org.uk/landlord/guides/minimum-energy-efficiency-standards.shtml . If you still need to carry out work to up the rating of your property and you are an RLA member we are working on a new deal to secure allocated funding for improvements for members to help them to reach the minimum E rating . This will likely be grant funding and could also include competitive finance options. It is a bit of a waiting game as Energy Companies and Local Authorities start to look at their obligations since the end of Green Deal.

      So i think your first call would be to check your EPC or get an EPC issued for your property (ies).Check if your properties are exempt and if not keep checking the RLA website / mailings for more details of applying for assistance to reach the ‘E’ target through our new partnership scheme.

      You can also find out more on Energy Efficiency and EPCs here – https://www.rla.org.uk/landlord/guides/energy_efficiency/guide_to_energy_efficiency.shtml and here https://www.rla.org.uk/landlord/guides/epc/index.shtml .

      I hope that this helps? If you need further information please feel free to call us on the campaigns team.

      Kind regards
      Natalie

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