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New renting rules: the landlord price cap comes into effect

Posted by Louise Hyde on 5 April 2019 at 10:33 am

Targeting poor domestic energy efficiency and ‘slumlords’ has long been an environmental and social mission for the government. The domestic energy sector is responsible for the largest energy consumption in the UK, higher than transport, industry and services. It also has the highest demand for natural gas. Poorly insulated properties require more energy to heat to the same temperature as well-insulated properties. This leads to higher bills, poorer living conditions for the tenants and more energy lost to the atmosphere.

Moving away from fossil fuels is posing a significant challenge for heating domestic properties in the UK. Additionally, fuel poverty is still a significant issue in the UK, with an estimated 2.2 million homes in fuel poverty in 2016. Fuel poverty puts pressure on respiratory, cardiovascular and mental health conditions for residents, in turn putting pressure on the already stretched NHS. This also contributes to 'Excess Winter Deaths’ (EWDs): the 2017-2018 winter period in England and Wales saw the highest excess winter deaths on record since 1975-1976 at a shocking 50,100.

The government’s regulations around energy efficiency in properties are designed to target these issues simultaneously, but many landlords feel they are bearing an unfair proportion of the cost.

From April last year the Minimum Energy Efficiency Standard (MEES) for any new tenancy became the ‘E’ rating, extending to all existing tenancies on 1 April 2020. Meaning landlords can no longer rent 'F' or 'G' properties without making the changes. Previously landlords could claim exemption if unable to find third party funding to make the improvements, but effective from 1 April this year, landlords are now responsible for making improvements to bring the property up to the MEES rating for up to £3,500 of their own money. Again, the landlords can claim exemption if they can prove the work would cost over £3,500 of their own money. In December 2018 the ‘deposit cap’ was also enforced to help protect tenants from high deposits to securing a rental. There are also plans to ban upfront tenancy fees, again to make renting more accessible for tenants. After the news this week, some landlords claim it’s the ‘final nail in the coffin’ and that they will have to sell after this.

Admittedly there is considerable cost attached to being a landlord: taxes, fire safety, HMO, PAT tests and energy measures costs. However, the average monthly rent in the UK of £940 reflects this. Landlords argue there is not enough third-party funding available for them, with the ‘Green Deal’ funding no longer available. However the estimated cost to bring a property from a G rating to an F is £1,200 adding to the argument that a £3,500 price cap could even be too low. Particularly as significant exemptions exist.

The government needs landlords and as many households as possible to switch to renewable heating. They previously encouraged this through the Green Deal but the funding for this was pulled in 2015. Now the UK’s funding towards home energy measures is primarily through the Energy Company Obligation (ECO) scheme which is for low income and vulnerable households. There is also a ‘Renewable Heat Incentive’ (RHI). The UK has made significant progress with renewable electricity but is behind in switching to renewable heat. Despite their being suggestions to ban new gas boilers and hobs in properties by 2025, gas boilers are very much the norm.

A recent BEIS public attitudes study found that 85% of the public asked had never heard of heat networks. However, of the 15% who had heard of them: 47% said they were likely to install one given the opportunity and 56% were positive about them. It also found the public are more aware of solar panels than renewable heating systems such as biomass boilers, ground source heat pumps and air source heat pumps. The study also found not owning the property (24%) and expensive to install (30%) being the main barriers for renewable heatingThe main incentives to switch to a new heating system were found to be cheaper bills (43%) and a more environmentally friendly system (33%). These findings highlight that the UK has a long way to go towards renewable heating systems being common place. On a positive note the RHI is one step made to address this.

This summarises some interconnected issues the UK faces. Our dependency on fossil fuels makes us vulnerable to supply security and the rising cost of the ever depleting gas supplies. This puts the population at risk and we need to push renewable heat for affordable warmth to prevent widespread health issues. Especially as these can be exacerbated from weather extremes as represented by the spike in EWD’s from the ‘Beast from the East’.

Rental properties make up a significant part of the UK housing stock, nearly 20% in England, therefore they need to be part of the renewable energy vision and fuel poverty solution. These new regulations may not be wholly welcomed, but they are needed. This is not the ‘nail in the coffin’ but a step towards step towards greener, warmer homes. 

About the author:

Louise joined NEF in 2018 after achieving her MA (Hons) in Environmental Sustainability and Geography and her Bachelor of Architecture degree from the University of Dundee. For her honours dissertation Louise researched the effectiveness of district heating as an environmental solution to reduce fuel poverty in Dundee. She is interested in sustainable energy and reducing fuel poverty. 

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