Calls for a lower cap on the costs to upgrade rental homes which are not energy efficient have been answered. The government has bowed to pressure and capped the costs of upgrades at £2,500, which is half what buy-to-let landlords were led to expect.
From 1 April next year, private rental properties need a minimum energy performance rating of E on an Energy Performance Certificate (EPC). Mainly, this affects older homes which are not as well-insulated as new-builds. There are about 280,000 rental properties in England and Wales in the worst energy bands F and G. The government’s assessment shows the lower cap means 139,200 households in rental properties will enjoy better insulation by April 2020. As well as meaning warmer homes, it should also reduce their energy bills. However, this is 121,000 fewer properties than if the cap was left at £5,000. So some campaigners feel many tenants are missing out and will have to put up with draughtier homes because of the U-turn.
Officials said the lower cap was needed so that landlords renting out F and G-rated properties were not faced with the burden of excessive costs. Also, landlords’ access to finance to help with energy-saving measures is now more difficult than when the policy was first proposed. When the regulations were announced, there were programmes such as the Green Deal to provide finance to homes for energy efficiency upgrades. These `no cost’ or Pay As You Save finance schemes would be paid back via savings made on energy bills. However, the Green Deal was closed in 2015 which has restricted the availability of such funding. The Green Deal has started up again as a private venture but the government is not clear whether a nationwide market offering finance will be available. Because of this, it is thought that many landlords could simply register for an exemption to the energy-efficiency policy because they did not have access to finance.
The National Landlords Association has also criticised the proposal because there is still the possibility that landlords would leave properties empty because they could not afford to carry out the improvements. NLA chief executive, Richard Lambert, said the government has made changes to landlord taxation which increases the costs of providing rental properties. Now, it expects landlords to find spare cash to make properties more energy efficient. It is not too much to expect the finance to be in place before the new policy is introduced, but this is not the case.