Rental Sector Won't Become Energy Efficient without Incentives - claim

Propertymark has urged the government to do more to help the country’s most vulnerable citizens heat their homes.  

Office for National Statistics data shows which people might find it hardest to heat their homes based on findings from EPCs and the 2021 Census.

EPCs are based on data and assumptions about properties collected by approved domestic energy assessors, who then use government-approved modelling software to produce a score typically ranging from 0 to 100. 

This normally ranks a property from A-G, with A being the most energy efficient. 

The Office for National Statistics found that: 

- Over 40 per cent of homes had no EPC by 2021 (this was true for both England and Wales). Homes are only legally required to have an EPC if they are being sold or rented out;

- Of rated homes, 58 per cent in England and 62 per cent in Wales have a rating below band C (i.e. below the ideal minimum standard for energy efficiency);

- 42 per cent of rated homes in England have a more energy efficient EPC rating of band C and above, as do 38 per cent of rated homes in Wales;

- Multi-general households in rated homes were the most likely group to have low energy efficient homes;

- Households with at least one older adult (aged 65+) were more likely to live in a lower energy efficient home;

- Of rated homes, social rented properties were more likely to be energy efficient than private rented homes and owner-occupied homes. 

In October 2021, the Government published its Heat and Buildings Strategy that set out how the UK will decarbonise homes and 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. 

Propertymsrk’s report reveals that while there is some consumer interest in EPCs, the level of importance varies across different sectors. 

In the residential market, 73 per cent of homebuyers show at least some interest in EPCs, but their influence on purchase decisions is limited. 

Similarly, tenants in the rental market show some interest but not to a significant extent. 

However, in the commercial market, the interest and influence of EPCs are much lower and 41 per cent of Propertymark commercial member agents surveyed reported investors never show an interest in the EPC and 59 per cent see no interest from tenants. 

Propertymark suggested the following recommendations to make homes for energy efficient: 

- Avoid a ‘one size fits all’ approach: Policy makers must move away from a one-size fits all policy and develop energy efficiency proposals that work with the different age, condition, and size of properties. This way grants and funding support can be targeted based on the architype of a property rather than its tenure and making each property as energy efficient as possible;

- Ensure timely implementation and provide clarity on targets: To effectively plan to retrofit homes, homeowners and landlords require clarity on how energy efficient property need to be, how it will cost and by when;

- 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. Until this is the case, alternative incentives such as vouchers to cover the costs of retrofit evaluations, loans, and grants to pay for energy efficiency improvements, allow energy performance improvements to be offset against rental income; 

- Embark on a national communication campaign: 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 property;

- Explore the introduction of a property passport: 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, 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; And

- If UK Government targets are reintroduced, they need to be realistic and practical for landlords to implement.  

Propertymark chief executive Nathan Emerson says: “If governments and departments across the UK are serious about moving to net zero through reducing the energy consumption in homes and buildings, landlords and homeowners need a greater financial incentive and support to make energy efficiency improvements.”