Concerns raised over energy efficiency target in the PRS

The Lettings Industry Council (TLIC) has written an open letter to the Ministry of Housing, Communities and Local Government calling for a review of the plans to increase the minimum energy rating for rental properties by 2025.

The open letter, which has been signed by a number of large letting agents, including big hitters like Savills and Knight Frank, calls for the timeframe to achieve a minimum C rating to be extended.

The Lettings Industry Council’s letter is signed by 17 agents, including Belvoir, Chestertons, Countrywide, Dexters, the Guild of Lettings Management, Hamptons, Hunters, JLL, Kinleigh Folkard & Hayward, Knight Frank, Max Estates, Maxine Lester Lettings and Property Management, Penhurst, Savills, Seraph Property Management, Spicerhaart and Squires Estates.

The letter says: “We welcome government taking action to improve energy efficiency in privately rented homes and fully support the need to improve our carbon footprint. However we would like to communicate the issues we foresee with the proposal set out in the consultation and offer our thoughts on an alternative solution.

“The timeframe proposed in respect of implementing a minimum C rating is far too short.

Landlords need time to recover from the financial hardship caused by Covid-19, relating to both personal and rental circumstances before being asked to invest further into the potentially significant refurbishment of their rental properties. In addition to many landlords dealing with rental arrears or rent reductions this year, tax breaks have been lost due to S24 of the Finance Act, electrical regulations have led to more expense and fees increased since the implementation of the Tenant Fees Act.

“Stock levels outside of London are already low in the Private Rented Sector and we run the risk of more landlords exiting the market as further legislative pressures are added.

The SDLT holiday introduced this year has already resulted in landlords deciding to sell their properties. With no information on how or when owner occupiers will need to comply with these energy efficiency requirements, more landlords may decide to sell to avoid the pressure of having to spend additional money on their properties. This could lead to a rise in homelessness if tenants are not able to purchase a property themselves, for example in recent years, and particularly in 2020, the sector has seen a significant increase in tenants signing up to receive Universal Credit.

“If the maximum investment cap for energy efficiency works is increased to £10,000 this, along with additional competition due to less stock, will inevitably lead to rent increases which will most significantly impact those on low income and typically the more vulnerable groups of tenants.

“The consultation states that any money that a landlord spends on energy efficiency refurbishment works prior to 2023 will not be counted towards the cap. This means if the works are going to cost more than £5000 and they are carried out before 2023 then landlords will find themselves having to spend more money than the cap states.”

The Lettings Industry Council has put forward its alternative proposals:

+ By April 2026: all new and renewed tenancies to have a minimum D rating – the average rating for all homes.

+ By April 2028: all existing tenancies to have a minimum D rating and all new and renewed tenancies to have a minimum C rating

+ By 01 January 2030: all existing tenancies to have a minimum C rating.

+ Bring the start date forward for the refurbishment works cap from 2023 to 2020.

“We believe our proposal will reduce the pressure on stock available in the PRS market whilst still achieving the overarching goal of all properties in the PRS (unless exempt) achieving an Energy Performance Certificate rating of a C by 2030.” the letter added.

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3 Comments

  1. RosBeck73

    Excellent proposals. Fingers crossed the Government agrees.

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  2. CountryLass

    There is also the issue that some Landlords have just spent money in the last year or so to bring it up to an E, and the work needed to bring it to a D/C rating is too expensive. I fully agree that we need to make sure that homes are energy efficient, but when I have landlords complaining to me that the house they rent to someone else already has a newer boiler/windows/what ever than their own home, it does not really put them in a good mood when told to spend more!

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    1. jan - byers

      They are free to sell if they do not want to spend more

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