OPINION: ‘What did you do to stop climate change Mummy?’

Dan Channer

Since the IPCC delivered its 2021 report in August, it seems that acceptance of the climate crisis has gone mainstream, with climate deniers now thankfully silenced by science. Given that housing creates 19% of the UK’s greenhouse gas emissions (CO2e), the question is what the rental industry is doing about it?

After reading agent comments recently decrying the proposed EPC changes, I started headbanging the wall in frustration. Do agents and landlords really believe they have no responsibility to lower their carbon footprint? Is the industry going to lean on the same ‘Landlords will just sell up or put their rents up’ argument that failed to work with Tenant Fees, Section 21 and Section 24?

My argument is that the need to de-carbonise the UK’s housing stock – while seriously difficult – should be seen as an opportunity for letting agents.

Why does this concern you?    

As you probably know, the Department of Business, Enterprise and Industry Strategy (BEIS) is proposing to raise the minimum EPC EER rating to C by 2025 for new tenancies and 2028 for existing tenancies, with a cap on retrofit works of £10,000. Roughly 3 million rental homes need investment. 62% of the PRS is rated D or worse compared to 39% of social rented homes. The PRS is way behind. The Consultation describes a ‘fabric first’ approach, where the aim is to increase the thermal performance of the building and not just change the heating energy source.

What happens next?  

The consultation closed last December and the BEIS was meant to respond in this Spring. Six months on we have no news. I ask BEIS for their timeline and they say, ‘Our response will be issued in due course’. Urgency is lacking.  

This vacuum of political clarity is compounded by parallel proposals to ban gas boilers being fitted after 2023; the delay of the widely anticipated Govt Heat and Building’s Strategy which may yet trump all other policies; and the launch of the Minimum Energy Performance of Buildings Bill, which looks and sounds like the BEIS Consultation turning into law but is in fact a Private Member’s Bill from the House of Lords and hence unlikely to happen.

Amidst all this the only grant available to subsidise property owner retrofits – the Green Homes Grant – was scrapped for no reason after just £36m from a supposed £1.5bn was spent. The House of Commons Environmental Audit Committee puts it well: “We consider the Government has significantly underestimated how much decarbonising our homes will cost, and it needs to get a grip on this now, before it is too late.”

Why is de-carbonising our rental stock such a big problem?

The obvious issue is that landlords do not benefit from a ‘better’ EPC through lower bills or higher rents. The upfront capital costs are a barrier and there are currently almost zero grants for landlords. Worse than that, any ‘improvements’ are not even tax deductible. Plus, the Consultation says only spending from 2023 will count towards the £10K cap.

Meanwhile the EPC is flawed. It measures the theoretical cost of heating rather than the actual CO2e. It rewards gas heating (which is artificially cheap and high carbon) and penalises electric heating, even though most low-carbon heating systems use electricity.

Tenants’ right to quiet enjoyment makes refurbishment hard to plan, there is corporate-led propaganda re. hydrogen replacing gas at grid scale, and questions about heat pumps which require superb insulation and/or large radiators as they run at low temperature. The pool of skilled labour is another matter: 11,000 heat pumps were installed in 2019 vs 1.7 million gas boilers.

What does the industry think?

Responses to the consultation were not supportive. Propertymark, the NRLA and TLIC all highlight the lack of incentives to motivate landlords and the impact on rents and supply. Questions arise about why are there no measures for homeowner to get to C rating? I agree with these points and, be under no illusion, effective large scale de-carbonisation will require significant Government intervention in terms of VAT reductions, tax changes, incentives and green finance innovation.

Why should agents accept the ‘C by 2025’ and get going?

Where I differ from the industry bodies is that I think the industry should start acting today. It is called a ‘crisis’ for a reason. I see five reasons why:

  1. Carbon legislation is coming anyway. This is my instinct; I do not have a direct line to Boris and Rishi. Landlords are still the softest of targets, even for the Tories (it was George Osborne who led Section 24 remember). Why not get ahead of the change?
  2. Have impact beyond your own business. My LinkedIn is flooded with agents promoting their ‘net zero’ offsetting. Which I love. But won’t you have far more impact by lowering your portfolio’s CO2e?
  3. Green mortgages. Around 45% of landlords have no mortgage and LTVs average 45-55% for those who do. There is real potential to fund retrofit work via small ‘green’ top-up mortgages of £5-20k.
  4. It’s a chance to impress your landlords. Now it gets more interesting. Landlords are not stupid. Many of them will be waiting for guidance on this issue. God forbid, some of them might care more than their agent. The EPC proposals are an opportunity for agents to make themselves more valuable to their clients by planning for the measures needed. Start with the clients who you know will be receptive, get some case studies and keep going.
  5. It’s a chance to make some money. One top agent told me their average remedial works for the EICR changes was £2000, on which they took a (transparent) project management fee. So, the climate crisis is a business opportunity for agents who understand the different carbon-mitigation options and can help landlords to enact suitable changes.

I am not naïve. Most agents would rather chew glass than ask landlords to spend money, particularly at this time of stock shortage. However, my former business spent 45 years persuading landlords to invest and we were rewarded with industry-leading margins and loyalty. This approach requires good, well-trained people (Property Managers) and certainly Points 4 and 5 will not work without them. Education is critical: I knew nothing 3 months ago and started educating myself after I read about gas boilers being banned – two days after I had had one fitted.

There is a choice. Focus on the problems or decide that letting agents are in a privileged position where they can directly influence many people to lower their CO2e – that could even be something to tell the kids.

Dan Channer is a former co-owner of Finders Keepers and now works as a consultant.  

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15 Comments

  1. BillyTheFish

    Well written and the least an agency owner can do is to create a net zero policy and get cracking. It is not difficult and your kids & grandkids will appreciate it.

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    1. AcornsRNuts

      And China, India etc will just laugh and carry on creating more CO2 in a day that we would in a lifetime.

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      1. jan - byers

        100% correct

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      2. A W

        1 China (Coal) 14.32%

        2 Saudi Aramco 4.50%

        The top two global contributors to greenhouse emissions (report from 2017) are from two companies (coal India ranks 6th), they amount to nearly 20% of global emissions. Until such companies are addressed, whatever we private indiivduals do or indeed estate / letting agencies do… is merely a drop in the ocean.

        Of course recyle and be green… but what we individuals do isn’t going to change the world (unless of course you can shut down all fossil fuel companies).

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        1. BillyTheFish

          Has anyone looked at the price of EVs over the last 10 years? Heat pumps instead of boilers at home are next, they are expensive right now but in 5 years time….

          Anyone heard about the campaign against plastic straws – how many businesses now hand them out?

          If everyone takes the view that individuals can’t affect the whole then that is the easy way out, you either don’t care or or think everything is just dandy (possibly the world is flat too). Of course there will be other countries who are behind or polluting more, the UK is well behind Scandinavian countries but that doesn’t stop them.

          If you really want an easy option then try avoiding the below dirty dozen which contribute 2/3 of UK’s plastic packaging and pollution problem: Coca-Cola, PepsiCo, Anheuser-Bush InBev, McDonalds, Mondelez International, Heineken, Tesco, Carlsberg Group, Suntory, Haribo, Mars and Aldi

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          1. jan - byers

            Or avoid buying anything from China – but no one will do that

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          2. A W

            If everyone takes the view that individuals can’t affect the whole then that is the easy way out, you either don’t care or or think everything is just dandy

            I would suggest having a read of: https://harvardpolitics.com/climate-change-responsibility/

            Stating that what you do matters, well it does… but only to a infinitly small decimal of a %. You brought up plastic straws, while it’s good that they are banned… they only make up less than 1% of plastic waste, what about the other 99%? Also as a quick side note, the reason businesses dont hand them out is because it is illegal to do so.

            Insulting others simply because they dont agree with your somewhat militant outlook (and bear in mind I never said I disagree with your viewpoint) is rather biggoted.

            Yes, every little helps… but what would help more is enforcing change on Transnational Corporaitons & bringing all countries in the world in line with EU recycling directives (yes the EU, not the UK).

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      3. Dan Channer

        The best articles I’ve read argue that India / China / etc will not take action until they see the USA, UK and Western Europe taking action. More than ever before the pressure is on the ‘West’ to lead.

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        1. AcornsRNuts

          LOL. they will take no notice of what we do regarding CO2.

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        2. jan - byers

          LOL the Chinese do not give a poo about world opinion ( Hing Kong) (Taiwan) (Concentration camps)

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  2. Woodentop

    Head in the sand comments ….

     

    After reading agent comments recently decrying the proposed EPC changes, I started headbanging the wall in frustration. Do agents and landlords really believe they have no responsibility to lower their carbon footprint? Is the industry going to lean on the same ‘Landlords will just sell up or put their rents up’ argument that failed to work with Tenant Fees, Section 21 and Section 24?

     

    1. Its not a case of do agents and landlords not believing they have a responsibility. It is a financial disaster for some and impossible to achieve the rating being quoted as desirable for some properties/construction, numpty. Try taking the blinkers off. Lettings is like many other business’s must at least cover costs and if no profit, what’s the point!!!!!!!

     

    2. Why just rented properties, why not go for all properties which would make a far better impact on emissions? Same answer as 1.

     

    3. They are selling up …. 25% down.

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    1. Dan Channer

      Well I’ve been called far worse than Numpty. Re. 1: yes, subsidies are needed. The consultation had a cap of £10K. For many homes it will not be possible to get to C. But for many (millions) of PRS homes it will be.

      Re. 2 – agreed. The 19 million homeowners should be an easier target as a) EPCs are higher in this category already, b) vast amounts of equity to secure small top-up green mortgages against, c) owners more motivated as they benefit from better insulated homes and cheaper bills.

      Re 3. Lots of factors go into this.

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  3. AcornsRNuts

    Nobody has yet mentioned a simple way to reduce CO2 emissions – stop increasing the population. More people means more houses, more cars etc. Having 3, 4 or more children is not eco-friendly, is it.

    I now st back and wait for the onslaught!

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    1. AgencyInsider

      Every serious problem the world faces in terms of climate change, food sustainability, pollution, and energy, stems from having too many people on the planet.

      Human beings truly are ‘bacteria in shoes’ and the way things are going humanity will be the root cause of its own destruction.

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    2. Dick Value

      Bill Gates approves of this post.

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