25th
Aug 2021
As widely reported across the PRS landlords will face having to pay thousands to meet the government’s new incoming requirements for energy efficiency upgrades in rental homes.
A geospatial technology company has just released its latest study of the proposed regulations to raise Minimum Energy Efficiency Standards in the PRS.
It is estimated that around 2.9m homes will have to meet the new incoming standard which on average will cost at least £9,872 per home, the company forecasts it could cost the private rental sector as much as £29bn.
In the past week the government introduced its new Minimum Energy Efficiency of Buildings Bill. The company’s analysis of its requirements has found issues and questions some key points.
The first question concerns responsibilities and costs. The company’s study of the EPC register for private rental sector ‘residences’ highlights that 65 per cent of these properties do not meet the EPC C grading, whilst the overall average of homes owned and rented properties below the grade stands at 58 per cent.
The company states the government support for ‘Green Homes’ has been cut from the original £1.5bn grant down to only £562m for the UK wide upgrade fund for low income families.
Chief executive Orla Shields says: “The bill itself is a hugely important step in the right direction: it’s right to target poorly performing housing stock at this crucial time in the fight against climate change. More consideration needs to be given, however, to who and how this is going to be paid for.
"An increase in minimum EPC E to C is a dramatic rise and landlords won’t see any short-term benefits from lower fuel bills. Government policy is all stick and no carrot at this point.”
The company’s second question is regarding exemptions, which haven’t yet been disclosed, however if it takes the same route as existing standards, there will be loopholes that could be exploited.
Landlords’ whose properties under the existing current minimum rating of E will only have to invest no more than £3,500 per property and in theory around 120,000 rental residences after investing this amount on energy efficacy, should still be able to rent them out no matter if they fall below the proposed grading.
This is also the case with the ‘all improvements made’ exemption that allows an additional 1,000 that are unable to find cost effective upgrades.
The company argues that both of these exemption categories will cover far more properties as the minimum energy efficiency standard’s (MEES) bar is raised; due to the higher costs to meet the raised targets it could mean that another 2.1m homes could actually fall under the exemption rules - which could be around 73 per cent of the PRS.
According to the company one proposal within the new Bill proposes the maximum investment to upgrade should have a ceiling of £10,000, and it claims this would certainly be a disincentive to landlords and encourage non-compliance.
Currently there is just 3 per cent of landlord properties failing to meet the existing MEES E rating, however once the bar is raised to the new C minimum the numbers of non-compliant properties will explode.
Properties failing to reach the necessary EPC grading will almost certainly cause the government’s Net Zero strategy for homes to fail, as landlords will either pay for the upgrade or simply just give up and sell their properties.
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