Energy Efficiency In The Rental Sector

Energy Efficiency In The Rental Sector 5 Point Plan

Propertymark has set out a five point plan to improve the status and usefulness of the Energy Performance Certificate and to get the issue of energy efficiency in the rental sector taken more seriously.

Avoid a ‘one size fits all’ approach – The industry body believes that policymakers must move away from a one-size fits all policy and develop energy efficiency in the rental sector that work with the different ages, conditions, and sizes of properties. This way grants and funding support can be targeted based on the archetype of a property rather than its tenure and making each property as energy efficient as possible. As a result, property is not lost from the private rented sector and buildings do not become too expensive to improve.

Ensure timely implementation and clarity on targets – To effectively plan to retrofit homes, Propertymark says that homeowners and landlords require clarity on how energy-efficient properties need to be, how it will cost, and by when. Currently, there is no definitive target that has been legislated for, only recommendations from multiple reports. The UK and Devolved Governments need to develop a long-term policy framework and legislate clear targets for EPC ratings for people to implement energy efficiency measures.

Provide financial incentives and help reduce energy bills – Investing in energy efficiency does not lead to higher house prices which would under different circumstances provide a sufficient incentive and until this is the case, alternative incentives should be introduced says Propertymark. These incentives include vouchers to cover the costs of retrofit evaluations, loans and grants to pay for energy efficiency improvements, the allowance of energy performance improvements to be offset against rental income, or the ability to offset improvement costs against capital gains tax which must be provided to support homeowners and landlords to act.

Embark on a national communication campaign – The industry body has said that vital to meeting decarbonisation targets will be solving the challenge of convincing landlords and homeowners of the benefits of retrofit and making energy efficiency improvements to the property. The views of landlords and owner occupiers is said to play a significant role in the success of retrofitting, which will substantially impact the uptake of energy efficiency improvements and retrofit programmes, even if government funding exists to cover the cost of retrofitting.

Explore the introduction of a Property Passport – Finally, Propertymark says that information would be transferable across building owners and help maintain sight of a long-term decarbonisation goal for the building. The process would not replace EPCs, but enhance them says the industry body, creating an opportunity to capture EPC data digitally and add to it with other data over time. A Property Passport would also provide detailed guidance on the actions required, and already undertaken, to improve the property, based on building fabric and operational data helping building owners and occupiers make decisions to improve the energy efficiency of buildings.

In October 2021, the UK government published its Heat and Buildings Strategy that set out how the UK will decarbonise homes and our commercial, industrial and public sector buildings, as part of setting a path to net zero by 2050.

Since then, the moving of goalposts for properties to reach a minimum EPC C rating has taken place with continual consultations on various reforms. Targets and regulations are also under review by the governments and departments in Wales, Scotland and Northern Ireland.

Starting with a review of the influence of Energy Performance Certificates on the decisions of homebuyers, property investors, and tenants, a new Propertymark report reveals that while there is some consumer interest in EPCs, the level of importance varies across different sectors.

Propertymark says that government grants that cover a broader range of home improvements are the only way to drive change, with its research discovering that 72 per cent of residential and commercial agents cited this as being the most important factor. 

This was closely followed by offering larger grants for home improvements, where 67 per cent said that allowing energy efficiency improvement costs to be offset against capital gains tax, and reduced tax on the purchase of home movers next property is a key incentive.

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