Publication - Research and analysis

Energy efficiency and condition standards in private rented housing: consultation analysis

Published: 14 Nov 2017
Housing and Social Justice Directorate
Part of:

This report presents an analysis of responses to the consultation on energy efficiency and condition standards in private rented housing.

Energy efficiency and condition standards in private rented housing: consultation analysis
Minimum standards assessment

Minimum standards assessment

The assessment

Question 1.10 - We are proposing that there should be a new minimum standards assessment based on the EPC methodology that will tell an owner how to bring their property up to standard. Please tell us your views on the following elements of that proposal.

Please explain your answers, and provide alternatives where applicable.

At Question 10, respondents were asked to give their views on each of 6 subjects. While some respondents indicated a clear position, other contributions were more nuanced or caveated by views expressed at other questions. As at other questions, a number of respondents expressed general opposition to the proposals.

Question 10(a) - That the assessment would use EPC methodology, since that is how we are proposing the standard is set.

Around 150 respondents answered Question 10a. A large number of respondents made only a short comment agreeing that EPC methodology should be used. Reasons given included that this makes sense and represents a consistent approach as the EPC system is already in use and understood. Others agreed but with qualifications, predominantly about aspects of the EPC methodology but also concerning other aspects of the proposals. Comments specifically on the EPC included that the system should be made more accurate or robust, with minimal assumptions made; be restricted to suitably trained and qualified assessors and regulated bodies to protect the consumer; and should produce a report in plain English, with clear practical recommendations and prioritised, cost-effective solutions, including sources of grant funding.

Many other respondents set out problems they saw with the existing EPC system, or highlighted aspects that need to be improved in an MSA process. The most frequently-stated opinions were that:

  • The EPC system is not fit for purpose, flawed, unreliable or inaccurate, too reliant on the assessor's opinion and requires revision.
  • It is not suitable for some building types particularly stone buildings, older properties or rural housing.
  • Clearer more transparent guidance and detailed recommendations including a variety of options are required. Suggested improvements need to be realistic to implement.
  • Creation of the new MSA is not necessary since the EPC could be used.

Other points made by smaller numbers of respondents included that EPCs are not good predictors of actual energy consumption and not sensitive to many factors that determine fuel poverty.

Some respondents made specific points about the way the EPC system handles both fuel costs, and the treatment of electricity and electrical heating. It was suggested fuel costs should not be included as many rural properties are off-gas grid and some properties may have pay-as-you-go electricity meters, both of which incur higher costs without affecting energy efficiency.

It was also suggested that an MSA should be advisory but not a requirement; that it should also include an assessment of property repairing standard compliance; and that specified improvements must guarantee the new EPC rating following the completion of the recommended works.

Question 10(b) - That the assessment would work out the lowest cost technically appropriate package of measures to bring the property up to standard, based on the average of costs used in EPC methodology.

Around 130 respondents answered Question 1.10b. Respondents who indicated agreement sometimes made only brief comments including that this is the right approach, is reasonable and fair, will help landlords make informed decisions, and should encourage landlords to carry out the work.

Others agreed with the principle but also qualified their approval. Points made by these respondents, and others who didn't express a clear view on the proposal but raised similar issues included:

  • Costs quoted in EPCs are often underestimated, do not include secondary work or can vary once on site. These must be realistic and must be reviewed regularly to ensure costs are accurate.
  • The guidance and costs in an MSA must be property specific. The range in costs according to property type and location is so broad that average values have little meaning. Alternatively, it must be made clear to owners that illustrated costs are representative, or the assessment should come with a disclaimer.
  • With respect to both the above points it was suggested that the Scottish Government does not need to adhere to the present Product Characteristics Database File used to inform cost estimates but could devise its own set of 'book' prices for assumptions in the MSA.
  • Different requirements for traditionally constructed buildings must be recognised and higher costs associated with work on rural properties should be acknowledged. It was suggested that even lowest cost work up to and beyond the proposed cost cap will not bring many such properties to band E.
  • Assessors need to understand specific requirements for properties of different construction types so that their recommendations are practical and relevant. It was suggested that although Green Deal Assessors already have the skills and knowledge to do this, Domestic Energy Assessors would require additional training to cover circumstances when a potential measure is not appropriate.
  • As well as the lowest cost, technically appropriate package of measures to bring the property up to standard, the assessment should also include information on alternative options to meet and exceed the current minimum standards. This could allow landlords to choose whether to carry out work to a higher standard in one go to minimise cost or disruption, rather than potentially having to make further improvements at a later date.

Other suggested content for the MSA included: lowest ongoing running costs and availability of technology in the area; the increase in rating expected from each recommended individual measure and an accurate cost for each measure; and possible combinations with renewables. It was also suggested that EPC methodology could be expanded, rather than creating a separate assessment.

With respect to RdSAP methodology it was suggested that this is only indicative, not all measures are well-modelled, and that this needs to be addressed. A further proposal was that if landlords spend £5,000 per banding but do not achieve the required level, this data should be fed into the assessment system to update the actual costs of the work. It was also argued that the EPC system is limited and cannot perform the function outlined in the question in a meaningful way. As a result, it was suggested that a more holistic assessment would be appropriate, accounting for the occupants as well as the property.

Question 1.10(c) - That the assessment would set out the package of measures to meet an energy efficiency rating of E, and separately of D, from the property's current rating.

Around 130 respondents answered Question 1.10c. Views expressed often reflected those set out at Question 1.4.

Many respondents agreed with the question as phrased. Comments included that this would allow the landlord to make an informed decision about whether it would be preferable to make improvements to a higher standard in one go.

Other respondents agreed in principle, but with various qualifications. Some of the reservations expressed concerned issues also detailed elsewhere, such as setting realistic standards for hard to treat or listed buildings, while others related to the assessment itself including that it must be in a clear format, or that information should be set out for achieving bands E and D individually, but also for E then D. Some respondents also expressed reservations about the prospect of the minimum standard being set at band D.

A further group of respondents suggested alternatives to the phased approach proposed in the consultation paper, or the target levels set, with knock-on effects on the measures they thought should be presented in the assessment including:

  • There should be a single minimum standard, set at band D rather than E. The assessment would therefore only require information on measures to achieve band D.
  • The initial standard should be set at band D, but with the aim of the next target being band C. Measures for achieving bands D and C should therefore be included in the assessment.

Other general points made included views that there is no need for a separate assessment system beyond the EPC, that the EPC methodology is flawed or not suitable for some property types and locations, or that the proposals as a whole are unnecessary or will cause landlords to raise rent levels. It was also suggested that the Scottish Government should confirm that landlords are not able to pass costs of assessments on to tenants.

The potential for an increase in the minimum energy efficiency rating to band D was a source of concern to a number of respondents, who suggested that there should be no specified timescale for this, that it should be a target but not a requirement, or that it should not be considered at all at present. Respondents making the last point sometimes also expressed doubt about the ability of many properties even to achieve band E using the current assessment system.

Other points on the content of the assessment included:

  • More expensive options could also be included where associated benefits might outweigh cost – for example if an item was quicker or less disruptive to install.
  • Inclusion of measures to achieve bands E, D, and C (or the maximum possible) was also proposed as a means of encouraging owners to do more than the minimum at each stage. A further suggestion was a pilot that included measures to meet a "considerably more challenging standard" within the assessment to investigate how trigger points, such as a change of tenancy, might be used to encourage deeper renovation of Scotland's housing stock.
  • It was also suggested that the minimum standard could be set at band C with an eventual target that all homes reach B or A.

Finally, it was cautioned that providing information as set out in the consultation paper would constitute design advice, raising the issue of liability should future damage be caused.

Question 1.10(d) - That the assessment would include a calculation of the property's EPC rating before identifying the appropriate measures, where there is no EPC under the current version of the EPC methodology.

Around 110 respondents answered Question 1.10d. Of these a substantial majority agreed with the proposal, with comments including that this is a necessary starting point, that it is not possible to identify whether improvements are required if an EPC assessment has not been carried out, and that it is essential in order to monitor the impact of the policy.

Other respondents suggested, as at earlier questions, that:

  • The EPC system is not fit for purpose, particularly for some building types, and much be reformed first.
  • Using the EPC system is preferable to creating a separate MSA.

Other comments at Question 1.10d included that:

  • If the energy efficiency rating showed that the property met the required standard, this should stand as a valid EPC rating and should be lodged on the register.
  • If the property met the required band E standard (and as suggested in the consultation paper) no further action would be necessary or, alternatively, that the MSA should continue to identify the works required to increase the rating to D.
  • An EPC should be produced by an Energy Assessor. It is unclear how a calculation of a property's EPC score would be cheaper and quicker yet still be as accurate as carrying out an EPC survey.
  • This may be confusing for small scale landlords.

Question 1.10(e) - That the assessment could include measures which are not currently in the EPC assessment, but which can be measured in the RdSAP methodology. If you agree with this proposal, please provide suggestions for what these measures might be, and what costs should be used for these.

Although around 90 respondents answered Question 1.10e, nearly 1 in 4 simply noted they had no opinion, or did not have sufficient technical knowledge to contribute further.

Among respondents who agreed with the proposal, reasons given include that this makes sense, is a positive or reasonable approach that allows for a more comprehensive and tailored assessment, or that the assessment should include as many measures as possible. Suggested additional measures included:

  • District heating systems. This was the only measure suggested by multiple respondents.
  • Smart grid based systems.
  • Low carbon heating systems.
  • Boiler make and model.
  • Battery storage systems.
  • Electric car charging points.
  • Current condition.
  • Repair and maintenance.
  • Ingress of penetrating damp.
  • Thickness of loft insulation.
  • Radon.
  • Flexibility in the system to address different building types, historic buildings, stone built properties, properties which are 'hard to treat' and/or in rural areas, and ground floor tenements.
  • Flexibility in handling of occupancy levels in relation to heating/hot water requirements.
  • Technology that is not currently within the EPC calculation methodology.
  • Information which could link into other local or national programmes available either at the time of the EPC or in the future.
  • Environmentally friendly recommendations and costs.
  • Environmentally friendly materials compared against non-environmentally friendly materials.

Some respondents pointed to issues with the RdSAP system itself including that:

  • Rather than using RdSAP, a better approach would be that improvement measures that can be modelled in full SAP version 9.92 could be employed (or another approved methodology).
  • The RdSAP product characteristics database file ( PCDF) needs to be updated on a regular basis and in a robust and transparent way but this is not being done. It was suggested a common methodology for collecting standardised data across the country is required, and that the costs of transport and working in remote areas also need to be taken into account.
  • With respect to new measures, it was suggested that these should be agreed in consultation with appropriate technical experts from academia and the professional associations. Where a householder or assessor identifies an additional measure, this should be assessed independently. New measures should be tested and certified by appropriate 3rd party checks before being approved.

Question 1.10(f) - That the assessment would cost in the region of £120-£160.

Around 130 respondents answered Question 1.10f. Respondents who agreed with the estimated cost of an MSA sometimes made no further comment or suggested this seems fair, appropriate, reasonable, or not excessive, although it was also suggested that the market will dictate the price.

Otherwise the most frequently made comments were that the suggested cost of £120-£160:

  • Is an underestimate. (Around 1 in 4 respondents.)
  • Is too high. (Around 1 in 8 respondents.)
  • Should be met by the Scottish Government. (Around 1 in 13 respondents.)

Many respondents who suggested that the cost is an underestimate reported experience of EPC costs significantly higher than the £30-50 quoted in the consultation paper. Several respondents cited local EPC prices of at least double the average figures mentioned by the consultation paper and others quoted £150 or more. Given this disparity, it was suggested that the actual cost of an MSA for some areas and property types is also likely to be significantly higher than the £120-£160 estimated.

Other respondents who suggested £120-£160 seems likely to be an underestimate did so because they thought the sum too low for the amount of work involved, particularly for large, older, more challenging or remote rural properties, although it was also suggested this is difficult to know until full details of the proposed format are available.

Some respondents who argued that the estimated cost is too high suggested that the price should be closer to that of an EPC. These respondents sometimes also noted their experience of EPC prices as being in line with the average costs cited in the consultation paper.

A number of respondents suggested that the Scottish Government should either subsidise or cover cost of the MSA. Reasons given included that this would provide an impartial assessment, be a more positive method of improving housing stock, and provide landlords with an incentive to carry out suggested work but also, more typically, that the MSA is not necessary.

Other comments on MSA costs included:

  • These may change over time. While some respondents suggested a possible reduction driven by market forces others noted the possibility of an increase if there are not enough assessors.
  • There could be a fixed MSA fee or fee banding according to property size and value.
  • The fee should be included in the proposed cap for improvement costs.
  • The fee should be capped for 5 years or should be reduced as an incentive for early compliance.
  • The fee should include a post-improvement EPC.
  • It would be better to improve the EPC instead.

Respondents also made a number of points regarding the training of EPC assessors, including that this will be challenging within the timescales suggested in the consultation document and that insufficient people may want to train as it is likely to be a career with a limited lifespan.

Question 1.11 - Do you think that the assessment should only recommend a package of measures which improves both the energy efficiency and environmental impact scores of the property?

Please explain your answer.

Table 15: Question 1.11 – Responses by type of respondent.

Type of respondent Yes No Don't know Not answered Total
Energy-related private sector 4 1   5
Landlord 7 11 4 6 28
Letting agents etc. 7 3   2 12
Local Authority 11 7 2 2 22
Other   4 4
Professional body 4 8 2 12 26
Third sector 6 3   2 11
Total organisations 39 33 8 28 108
% of organisations answering 49% 41% 10% 100%
Individuals 34 27 12 17 90
% of individuals answering 47% 37% 16% 100%
All respondents 73 60 20 45 198
% of all respondents 37% 30% 10% 23% 100%
% of all those answering 48% 39% 13% 100%

There was no clear balance of opinion at this question. Of those answering, 48% agreed that the assessment should only recommend a package of measures which improves both the energy efficiency and environmental impact scores of the property. However, 39% disagreed and 13% said they did not know. Overall, organisational and individual respondents showed a very similar level of agreement (49% and 47% respectively). Amongst organisational respondents, professional or representative body respondents and landlords were least likely to agree.

Around 110 respondents made a comment at Question 1.11. The answers given suggested that some respondents interpreted the question as asking whether there should be other measures in addition to those that improve energy efficiency and environmental impact scores. Others interpreted the question as asking whether measures that do not improve both scores should be excluded. Respondents sometimes also made comments that were apparently at odds with their answer to the quantitative question.

The majority of respondents who agreed made no further comment. Those who did explain their reasons for agreeing sometimes argued that the legislation needs to support the Scottish Government's climate change policy, or that meeting both objectives should allow access to a wider pool of funding for meeting multiple aims and will avoid possible contradictory policies. It was also suggested that there are few instances where improved energy efficiency and improved environmental impact scores do not go hand-in-hand and that, as stated in the consultation paper, only a relatively small number of properties would be affected. It was acknowledged that, for these properties, the lowest cost package of measures would not be considered appropriate.

Some respondents who otherwise agreed in principle suggested there should be recognition of circumstances where this is not appropriate. Specifically, an exception was proposed where the property has no fixed heating system, thereby permitting installation of mains gas where there is a very high risk of fuel poverty, even if this means a poorer environmental impact score. Where possible, it was suggested an exception policy could encourage use of low carbon heat technologies where appropriate instead of mains gas connections. The same exception was also suggested by one respondent who had disagreed.

Otherwise those who did not agree often expressed a view that energy efficiency should be the focus for this legislation. Their reasons for thinking this included that:

  • Prioritising energy efficiency is the best way to provide affordable heating and address fuel poverty and there is potential for confusion if regulations apparently aiming to improve standards of energy efficiency exclude measures with positive outcomes for tenants, especially those who are vulnerable and/or in fuel poverty.
  • If compliance is being based on energy efficiency, then the package of measures should recommend how this can best be achieved. Clarity is needed whether both energy efficiency and environmental impact are considered core purposes of this initiative.
  • Limiting measures to those that improve both energy efficiency and environmental impact scores may be particularly limiting for hard to treat properties.
  • This is likely to increase the cost of upgrading properties and will therefore result in more properties seeking a cost cap exception.
  • Rented properties should only have to meet environmental objectives common to all property.

In addition, some respondents - including both those who had agreed and disagreed at the Yes/No question - argued there should be freedom for the landlord to choose from all the potential options available to them.

Suggestions as to how to proceed included that:

  • The recommendations could include examples of best practice in complying with energy efficiency requirements and having the biggest impact on carbon emissions, to give the owner a choice.
  • The assessment should explain which measures and possible combination of measures could improve both energy efficiency and environmental impact.
  • The assessment should include measures suitable and feasible for the property to mitigate the environmental impact – such as renewable energy options, which might create an additional income for the landlord as well as be beneficial for the tenant.
  • Financial or other incentives could be introduced to encourage packages that provide the best option for both running costs and low carbon emissions, where this is more expensive than other packages that meet the minimum standard.

It was also argued that both energy efficiency and environmental impact can be affected by the way the property is used by the tenant, and that advice to tenants should be provided or that an Occupancy Assessment should also be carried out. However, it was also suggested that only long-term tenants should be involved in any assessment given high rates of tenant turnover, and that the potential benefits of improvement measures should not be based on one tenant.

Minimum standards assessor

Question 1.12 - We propose to develop a new role of minimum standards assessor.

(a) Do you think that a new role of a minimum standards assessor is needed?

Table 16: Question 1.12 – Responses by type of respondent.

Type of respondent Yes No Don't know Not answered Total
Energy-related private sector 3 1   1 5
Landlord 9 9 4 6 28
Letting agents etc. 4 3 3 2 12
Local Authority 12 2 7 1 22
Other 1   3 4
Professional body 5 3 5 13 26
Third sector 8 1   2 11
Total organisations 42 19 19 28 108
% of organisations answering 53% 24% 24% 100%
Individuals 27 37 14 12 90
% of individuals answering 35% 47% 18% 100%
All respondents 69 56 33 40 198
% of all respondents 35% 28% 17% 20% 100%
% of all those answering 44% 35% 21% 100%

There was no clear balance of opinion at this question. Of those answering, 44% agreed that a new role of a minimum standards assessor is needed, 35% disagreed and 21% said they did not know. Overall, organisational respondents were more likely to agree than individuals (53% and 35% respectively) and amongst organisational respondents, landlords, letting agents and professional or representative body respondents were least likely to agree.

Around 130 respondents made an additional comment. Respondents who did not agree sometimes stated that they did not support, or were unclear of the benefits of, a new MSA, or that it should be an advisory service only. Others suggested that there is no need for a separate assessor role, or that the function could be carried out by existing EPC assessors (sometimes adding that additional training could be provided), or that professionals such as surveyors and architects can provide this service.

Some respondents who agreed also suggested that this could be an additional qualification for an EPC assessor, or that some EPC assessors already have the skills to provide property specific recommendations. Others noted that if the role is created it will require suitably qualified individuals with specialist knowledge, or pointed to the importance of regulation, accuracy and consistency. Respondents who agreed sometimes qualified this approval to the effect that the new assessor should also have better understanding of the issues associated with listed, hard to treat, off gas grid, rural, traditional buildings, or that the assessment should be financed by the Scottish Government.

Other respondents noted the importance of targeted, credible, impartial or independent advice. It was suggested both that assessors should not be linked with an industry which could supply recommended measures and that, to reduce any risks that assessors could be influenced by incentives to recommend particular measures, assessments should offer a range of options rather than specify a particular package. Other suggestions included: that leasing agents should be able to complete a course to train as an MSA assessor; that MSA assessors should be able to assess the full repairing standard including energy efficiency improvements; and that more information is needed before deciding whether a new role is needed.

A number of respondents made specific reference to the Green Deal Advisor ( GDA) qualification, noting that the MSA assessor role would mirror this, or that GDAs would already be suitably trained for the MSA role while Domestic Energy Assessors would need upskilling. Problems associated with the Green Deal were also highlighted, including that individuals paid to achieve certification for a scheme that was withdrawn not long afterwards, and that the MSA role needs to have a long-term future. It was also suggested that the occupancy assessment element of the Green Deal report may be beyond the scope of the present policy.

(b) If so, what additional skills beyond those of an EPC assessor would be needed?

Around 100 respondents made a comment at Question 12b. Answers often reflected issues that respondents had already identified as problems with the existing EPC system. The most frequently-raised issues were the need for better understanding or knowledge of:

  • Construction and the built environment in general and of specific building types and construction methods in particular.
  • Heating and ventilation.
  • Insulation.
  • Building health/condition.
  • Planning, listed buildings and conservation areas.
  • Construction and retrofitting costs and economics.

Other items suggested by fewer respondents included:

  • Solid wall training from Historic Environment Scotland.
  • Knowledge of the repairing standard.
  • Understanding of PRS legislation relevant to registration of landlords.
  • Knowledge of grants and funding.
  • Understanding of any new software platform.

More generally, and reflecting the consultation paper, respondents suggested that the new assessor would need more comprehensive knowledge of the possible measures available in order to provide tailored recommendations on the most appropriate measures for a particular property.

Some respondents suggested professional qualifications or membership of professional bodies that could be appropriate for an MSA assessor including:

  • Building surveying, including membership of Royal Institution of Chartered Surveyors ( RICS).
  • Architecture, including membership of Royal Institute of British Architecture ( RIBA).
  • Membership of the Chartered Institute of Building.
  • Structural engineering.

However, it was also argued that, as the advice an MSA assessor can give will be limited to that which the SAP methodology can model, then the existing GDA qualification is sufficient. A Chartered Building Surveyor would be able to take this advice further, it was added, offering professionally indemnified advice on improvements that go beyond those only within the scope of SAP.

Several comments related to the tenant as well as the property: training in occupational behaviour and providing educational advice was suggested, as was training on interaction with (potentially vulnerable) tenants, including providing explanation of why the assessment is needed, and managing their needs and expectations from an assessment.

(c) How long do you think it would take to get this in place?

Around 90 respondents made a comment at Question 12c. Specific times suggested by respondents varied considerably, ranging from 6 months or less to 10 years or more. The most frequent suggestions were:

  • One year. (Around 1 in 9 respondents.)
  • Up to 2 years. (Around 1 in 11 respondents.)
  • Between 3 and 5 years. (Around 1 in 11 respondents.)

Other respondents related their answer to the proposed implementation date of March 2019, including that the necessary steps might not, or cannot be in place in time. Respondents who had proposed setting a minimum of band D but delaying implementation until 2021 suggested that this date could be achieved. It was also suggested that timely implementation will depend on working with existing providers.

Some respondents also identified elements of the process that would need time to put in place including developing the methodology and software required as well as development and delivery of training. It was suggested that the time needed for training would depend on the existing skill set of those involved and would be shorter for existing EPC assessors to upgrade. It was also suggested that being an MSA assessor needs to be marketed as an attractive role to get EPC assessors interested in retraining.

Further suggestions included:

  • There should be a pilot phase.
  • The Scottish Qualifications Authority could be asked to lead an update of the GDA qualification to create a qualification designed for the Scottish market.
  • Construction professionals such as architects or surveyors are already available to advise building owners.
  • It is important to learn lessons from recent efforts to provide training for letting agent regulation.

(d) Who do you think should maintain the register of assessors?

Around 110 respondents made a comment at Question 12d. The most frequently-made suggestions were that the register of assessors should be maintained by:

  • The Scottish EPC registrar/The Energy Saving Trust/Home Energy Scotland.
  • The Scottish Government.
  • Local authorities, including building standards and landlord registration.
  • Royal Institution of Chartered Surveyors/other professional body.
  • Regulated Domestic Energy Assessor accreditation schemes.

Other suggestions made by only one or a small number of respondents included:

  • The Housing and Property Chamber – First Tier Tribunal ( FTT) for Scotland website.
  • National Registers of Scotland.
  • Energy Action Scotland.
  • Ofgem.
  • COSLA.
  • The Scottish and Northern Ireland Plumbing Employers' Federation.
  • Housing associations.

Amongst respondents suggesting involvement of local authorities, reasons given included that this would ensure assessors have a good understanding of the local area, or that the system should only go live when the local authority has recorded a minimum number of assessors in the area. Respondents who suggested records should be held on a national register sometimes also suggested that local authorities should have access to the information.

Other general comments included that the register should be held by an impartial body or not for profit organisation. It was also suggested that the register should be monitored to ensure only qualified and competent assessors are listed, and that quality assurance is essential in creating confidence. Further information on how the process would work in the interests of the consumer was also requested.