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Publication - Research Publication

Energy efficiency and condition standards in private rented housing: consultation analysis

Published: 14 Nov 2017
Part of:
Housing, Research
ISBN:
9781788513906

This report presents an analysis of responses to the consultation on energy efficiency and condition standards in private rented housing.

147 page PDF

1.2MB

147 page PDF

1.2MB

Contents
Energy efficiency and condition standards in private rented housing: consultation analysis
Getting the work done

147 page PDF

1.2MB

Getting the work done

Sources of information

The consultation paper notes that private sector landlords and tenants can get free and impartial advice from Home Energy Scotland ( HES) on energy saving, renewable energy and access to funding, including access to schemes provided by the UK Government.

Question 1.13 - What are your views on the existing advice and information provision provided by Scottish Government for landlords and tenants? What changes, if any do you think are required?

Around 120 respondents made a comment at Question 13. General comments included that the importance of these services cannot be underestimated given the challenges associated with communicating to landlords and tenants, and that there needs to be more investment in consistent provision of advice across Scotland. It was also argued that if good quality information reached landlords and tenants it would encourage compliance rather than implementation relying on enforcement.

A number of respondents expressed generally positive views on existing provision including that it is sufficient, helpful and reasonable, an excellent source of advice and information, or that there is no evidence that landlords find it difficult to access advice in relation to property maintenance or tenancy management. A number of other sources of advice and information were also noted.

Other respondents had more negative views with comments including that existing provision is poor, limited, cumbersome, complex, potentially confusing or can be hard to navigate and that it is difficult to find advice or information. It was suggested HES is not resourced to provide locally-based advice and that resourcing of face-to-face advice is limited.

Although the range of advice and support provided for tenants was noted, it was also suggested that HES may be less effective for tenants or that, while information is provided, casework and advocacy services are less well developed. It was also suggested that tenants are often unaware where to go for information and advice on energy saving, and reducing fuel costs.

A number of respondents suggested that existing advice should be evaluated to understand what works and what could be improved. It was suggested that Citizens Advice Scotland or Energy Action Scotland could be commissioned to conduct such a review, which should involve landlords and other stakeholders. Other suggestions included that the existing provision could be simplified.

It was also suggested that there is currently a marked difference in the quality of information provided by local authorities, resulting in varying knowledge and understanding of the rights and responsibilities of landlords and tenants. It was suggested that the guidance provided by Aberdeenshire might be adopted more widely. The possibility of providing information and links to relevant sites from the landlord registration website was suggested, as was the need for more work to make clear the penalties for non-registration of private sector rental property.

Several respondents suggested that there should be a central website, or an independent 'Information Hub' bringing together all information, advice and assistance for stakeholders.

Describing the format or content of advice and information they would like to see going forward, respondents' suggestions included that this should:

  • Be simple, clear and easy to understand, and in plain English.
  • Highlight benefits of energy efficiency improvements for both landlords and tenants.
  • Include an online tool to allow landlords to assess the potential impact of proposed works on the EPC rating of their property.
  • Include clear, concise information on assistance schemes for landlords.
  • Include a quality control system for contractors.
  • Include specific advice for tenants, including information in different formats for more vulnerable tenants and those whose first language is not English.

The importance of advice for tenants was highlighted by a number of respondents. It was suggested this should include:

  • Greater awareness of the tenant's rights and of what can be expected in terms of the energy efficiency of a rented property.
  • Support on better use of energy, including how this is affected by occupational behaviour and lifestyle.
  • Ensuring tenants understand how to use existing and new equipment such as heating controls, timers, and ventilation systems.
  • Face-to-face advice or advocacy services, especially for people who are vulnerable, on low incomes, or in extreme fuel poverty and who may not have access to online services. It was also suggested that the new SEEP schemes should work closely with community-based and trusted organisations who are already embedded within communities.

Another theme common to several responses at Question 1.13 was the need to do more to promote the services that are available and, in particular, to raise awareness of recent and proposed changes in the sector. Specifically, it was suggested landlords may not be aware that a minimum band D energy efficiency rating could be required in the future.

The importance of including property letting and management agents in stakeholder engagement exercises was also suggested as was ensuring new requirements are communicated to Environmental Health, Trading Standards, Housing and Building Standards departments in local authorities, and also to organisations which provide tenant and consumer advice. Workshops for landlords were suggested as was more proactive communication with landlords via the landlord registration system.

Meeting the cost

Question 1.14 - What financial or fiscal incentives support - such as grant and loans, tax or otherwise - would you find most useful to help to accelerate the installation of energy efficiency measures and help landlords meet any proposed standards?

Around 160 respondents answered Question 1.14. Around 4 in 5 of those answering the question indicated that one or more of the forms of support proposed could or should be provided. Of the three examples given in the question, grants were the most frequently mentioned form of support, followed by tax incentives, and then loans, although many respondents suggested all three should be available. Local authority respondents were particularly likely to have suggested grants should be available. Otherwise, there were no clear connections between respondent type and the form of support preferred.

Very much smaller numbers of respondents suggested that appropriate incentives are already available, that financial incentives are not the best way forward, or that public subsidies should not be used to support private landlords. A small number of individual respondents suggested that rather than being offered incentives, landlords who fail to comply with minimum energy standards should be penalised.

General points made by only one or a small number of respondents included:

  • There should be a review of existing advice and support for landlords.
  • Any incentive schemes should be simple and easy to use. All existing schemes should be signposted.
  • Grants or loans should be delivered through a single funding scheme or ring fenced Private Sector Housing Grant Budget.
  • There should be long-term consistency rather than time-limited initiatives or, alternatively, that initiatives should be used to encourage early compliance.
  • Assistance should extend to all PRS landlords, including those operating as sole traders. It was also suggested there could be a separate classification for landlords who only own one property.
  • All types of private tenancy should be treated equally.
  • Financial support is important for improvements to buildings with mixed ownership and a common approach to funding is needed for whole tenements or blocks of flats.
  • It should be possible to use local tradesmen rather than being restricted to an approved list.
  • There could be incentives for low carbon heating.

Grants

Around 1 in 8 respondents suggested that grants should be targeted to certain types of property. Specific suggestions included that which is:

  • The least energy efficient.
  • The costliest to improve.
  • Hard to treat.
  • Rural.
  • Older.
  • Stone built.

In terms of particular measures that might attract support, respondents highlighted external wall and solid wall insulation.

It was also suggested both that grants should be targeted on tenants in most need and that eligibility for grants should be expanded to tenants on low incomes. Respondents raising this possibility also suggested that this could be on the basis of guarantees of limited rent increases or restrictions on the landlord's ability to sell the property for a specified period.

With regard to the level of grant that might be provided suggestions included 50-75%, 75-90% and 100%. Specific suggestions of conditions that might be set included:

  • Minimum 50% grant provided that the property is kept in the rented sector for a minimum of 5 years from date of completion of works.
  • Match funding.
  • Grants be based on the profit yielded by an individual property, rather than the financial status of the owner.

Further suggestions included that grants should be extended to cover secondary works.

Several respondents made comments on the HEEPS Area Based Scheme including that:

  • This should be open to empty homes which are being prepared to be rented in the private sector.
  • It is important that ease of access is maintained as far as possible to encourage parties to access assistance.

It was also suggested that it would be helpful to have funding specifically for high impact high cost measures such as external wall insulation, for which there could be a HEEPS budget.

Tax incentives

With respect to the tax regime, several respondents suggested particular schemes or allowances including that:

  • The Landlord's Energy Saving Allowance ( LESA) should be reintroduced. Some respondents also proposed the previous limit of £1500 per dwelling should be increased to £5000, or the relevant cost cap.
  • Recent cuts to tax relief for residential landlords should be reversed.
  • Investment in band D or higher improvement measures should offer landlords a taxable benefit on earnings for the year of installation. This should only be available until the end of March 2022.
  • There should be time-limited relief for properties in bands F and G, in line with that for maintenance and repairs, up to the level of the cost cap.

It was also suggested that, for tax purposes in general, expenditure on improved energy efficiency measures should:

  • Be offset against income.
  • Be treated as repairs.
  • Not be treated as a capital item where tax relief is only applied at the point of sale.
  • Reduce capital gains tax or inheritance tax liability on let property.

It was also observed that tax concessions assume that a rental business is profitable, and for a loss-making business such concessions would be irrelevant.

With respect to VAT comments included:

  • This should be 0% for energy efficiency measures, and that this should extend to secondary costs such as redecoration or removal expenses.
  • The rate of 5% charged on 'energy saving products' such as insulation should be extended to double glazed windows which currently attract the full rate of 20%.

Although a small number of respondents suggested that Council Tax relief might be appropriate, others noted that this is a local tax and that any proposals around incentives should be determined by local authorities, or argued it is not suitable as it is a benefit to the tenant rather than the landlord.

Loans

A number of respondents commented on the poor take up of previous loan schemes, including the Green Deal, where it was argued landlords were deterred by complexity or poor returns. The case for interest free loans was often made, with fewer respondents suggesting that low interest rates should apply. Payback terms aligned with rental value were also suggested.

Respondents also referred to examples of loans schemes they considered to have been effective including: Home Energy Scotland loans; and the HEEPS cashback scheme. With respect to the latter it was suggested this would perform better with a higher cashback amount than that currently on offer.

Other suggestions

Other proposed measures included:

  • Providing free MSAs or EPCs.
  • A boiler scrappage scheme.
  • Direct funding for apprenticeships in relevant trades, or training grants for installers.
  • Mortgage providers should be encouraged to consider energy performance ratings when setting lending policies. This could incentivise the purchase of more efficient homes and encourage sellers to upgrade before sale.
  • A cash incentive for landlords to access finance from their existing mortgage provider to pay for the cost of the measures and their installation.
  • Incentives should be tied in with work to bring long term empty homes back into use.

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