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

Bringing in the standard of EPC E at point of rental and then at backstop date

Question 1.5 - Do you think that the minimum energy efficiency standard should first of all apply only to those properties where there is a change in tenancy, and after that to all private rented properties? Please explain your answer.

Table 6: Question 1.5 – Responses by type of respondent.

Type of respondent	Yes	No	Don't know	Not answered	Total
Organisations:
Energy-related private sector	3	2			5
Landlord	12	8	2	6	28
Letting agents etc.	10			2	12
Local Authority	12	7	1	2	22
Other	2			2	4
Professional body	12	5		9	26
Third sector	6	3		2	11
Total organisations	57	25	3	23	108
% of organisations answering	67%	29%	4%		100%
Individuals	49	28	6	7	90
% of individuals answering	59%	34%	7%		100%
All respondents	106	53	9	30	198
% of all respondents	54%	27%	5%	15%	100%
% of all those answering	63%	32%	5%		100%

A majority of respondents, 63% of those answering the question, agreed that the minimum energy efficiency standard should first of all apply only to those properties where there is a change in tenancy, and after that to all private rented properties. Individual respondents were less likely to agree than organisations (59% and 67% respectively).

Around 140 respondents made a comment at Question 1.5.

Among those who agreed, respondents suggested that at a change of tenancy seems a natural, appropriate, practical, reasonable, fair or sensible time at which to apply new minimum standards. The most frequently identified benefits were:

• Work is easier in a vacant property and this will minimise disruption for tenants, especially those with children.
• It will allow landlords time to plan and spread costs.
• It will avoid problems with availability of assessors or contractors, or inflated costs as deadlines approach.
• The relatively high turnover rate means many properties will be upgraded.

Respondents who did not agree gave a number of reasons, most frequently and in approximately equal numbers:

• General opposition to the proposal to impose minimum energy efficiency standards at all.
• Agreement with the application of the minimum standard at a change in tenancy, but not that it would later would apply to all tenancies – that is that there should be no backstop date.
• Agreement with the minimum standard, but not that it should apply at a change in tenancy.

Other suggestions made, but by fewer respondents, included: the requirement should apply when tenancies are renewed or changed, as will be the case in England and Wales from 2018; it should apply to the implementation of the proposed E standard but not thereafter; the worst rated properties should be addressed first, irrespective of a change in tenancy; or the requirement should apply to all tenancies.

In other respects, similar issues were raised by respondents irrespective of their answer to the Yes/No question. These are outlined below.

Exceptions

As at other questions, both respondents who agreed and those who disagreed with the proposals made a case for differing standards for different types of property, or that a longer period should be allowed in certain circumstances. These included flats with deed restrictions in buildings with multiple flats/owners; and improvements requiring planning permission.

Unexpected ending of a tenancy

Potential problems were highlighted associated with the unexpected ending of a tenancy, such as an unexpected void leaving a landlord without enough time to raise funds to implement improvements, arrange an assessment and organise contractors. It was also noted that the new Private Tenancy regulations will give tenants greater freedom to end their tenancies at short notice making it harder for landlords to plan in these circumstances.

Enforcement

Local authority respondents in particular identified problems surrounding enforcement, including questioning what data will be legally available to inform their officers of a change of tenancy. Council tax data or tenancy deposit schemes were suggested but it was pointed out that procedures would have to be changed for this information to be shared, or that significant work could be created for the departments involved. Since there is no requirement for landlords to notify the local authority of a change of tenancy unless it affects council tax or housing benefit, it was suggested information about a new tenancy will be difficult to manage or only available retrospectively.

As an alternative to a change in tenancy, the Landlord Registration Scheme was suggested as a simpler mechanism for enforcement, while still capturing all property over a 3-year period – with an EPC being required at the point of reregistration for the landlord. It was suggested that this requirement could be flagged up to the landlord well ahead of the renewal date, and that an increase in landlord's registration fees would cover the cost of implementing the new measures.

Other suggestions included:

• A rent increase could be a further trigger requiring compliance.
• More detail is needed on how accommodation with a sitting tenant can be monitored.
• A fixed backstop date would be less complicated for landlords and easier for local authorities to enforce, while not preventing a landlord taking advantage of an earlier change in tenancy to carry out work.

A backstop date

The potential effect of a backstop date on long term tenants was raised by several respondents including that:

• Existing tenants will be disadvantaged by having to wait longer for improvements.
• Long term tenants may not want invasive work done or may not be able to remain in the property while the work is done and may be forced to move out. It was suggested there should be an exception if works would require the tenant to move out or if a tenancy would have to be ended as a result.
• Since rural tenancies are typically much longer than urban ones, the work on rural property would often be completed at the backstop date, so there may be a bottleneck at the backstop date.

However, other respondents agreed that there has to be a backstop date even if property is not empty.

Other suggestions

Other points raised at Question 1.5 included that there should be an effort to raise awareness of the changes to ensure compliance before the commencement of a new tenancy, and also that subsequent changes of tenancy should not reset the clock for the completion of improvement measures.

Question 1.6 - Do you think that 1 April 2019 is the right date to start applying the minimum standard of E when there is a change in tenancy?

Please explain your answer.

Table 7: Question 1.6 – Responses by type of respondent.

Type of respondent	Yes	No	Don't know	Not answered	Total
Organisations:
Energy-related private sector	5				5
Landlord	8	14	1	5	28
Letting agents etc.	4	4	2	2	12
Local Authority	14	5	3		22
Other	2			2	4
Professional body	4	10	3	9	26
Third sector	4	4		3	11
Total organisations	41	37	9	21	108
% of organisations answering	47%	43%	10%		100%
Individuals	22	52	8	8	90
% of individuals answering	27%	63%	10%		100%
All respondents	63	89	17	29	198
% of all respondents	32%	45%	9%	15%	100%
% of all those answering	37%	53%	10%		100%

A majority of respondents, 53% of those answering the question, disagreed that 1 April 2019 is the right date to start applying the minimum standard of E when there is a change in tenancy. Overall, individual respondents were more likely to disagree than organisational respondents (63% and 43% respectively) although there was substantial variation in the level of support between different organisational groups: all of the energy related private sector and other respondents who answered the question agreed with the proposed date, but only a small proportion of professional body respondents and landlords agreed.

The Shelter Scotland report asked private tenants if they agreed with the dates for starting to apply the minimum standards of E (as at this question) and D (as at the next question. Of the 24 private tenants who answered this question, 14 thought the dates are too far away.

Around 145 respondents made a comment at Question 1.6. Among respondents who agreed, comments included that 1 April 2019 is fair, realistic, reasonable, achievable or gives sufficient time, that the minimum standard should apply to all tenancies from the start, and that renewals should be included as well as changes of tenancy. Other points included that agreement was conditional on there being no delays in making the regulations or that there needs to be a clear tax year between legislation being laid before parliament and enforcement.

Respondents who did not agree gave a range of reasons, the most frequent being:

• April 2019 is too soon. (Around 1 in 5 respondents.)
• General opposition to any minimum standards, or a suggestion that the proposed E rating is too high, or that many exceptions will be required. (Around 1 in 9 respondents.)
• The EPC assessment system should be improved first. (Around 1 in 10 respondents.)

Other reasons, each given by a smaller number of respondents, included:

• Other regulatory changes in this sector – particularly implementation of the Private Housing (Tenancies)(Scotland) Act 2016 – need time to bed in before further reforms are introduced.
• That the date should instead be earlier.

Around 1 in 7 respondents suggested alternative start dates, ranging from 1 April 2020 to 5 years after the EPC system has been improved. The most frequently suggested alternatives were 2 years from the point when regulations are finalised or the legislation is implemented, or after at least 5 more years.

As at Question 1.5, several respondents suggested that the phased implementation approach should be rejected in favour of a move straight to band D sometimes also proposing additional time will be required to achieve this: alternative start dates of 2021 and 2025 were suggested, or simply that the time should be longer than currently proposed.

An alternative proposal, again reflecting comments at Question 1.5, was that the standard should apply not at a change of tenancy, but at the point of landlord reregistration.

Other points, raised by respondents irrespective of their answer to the Yes/No question (although predominantly by those who had said No) included:

• Concern about the availability or quality of trained assessors.
• Concern about the availability of tradesmen or contractors.
• Concern about the time and resources available to local authorities in order to implement monitoring and enforcement measures.
• That an effective communication strategy must be put in place to ensure all involved are aware of the changes.

Other suggestions made, but by only a small number of respondents included:

• New guidelines should apply to property new to the sector.
• A cap on tenant turnover should be implemented – so that no more than a certain % of a landlord's portfolio has to be upgraded in a single year, irrespective of the number of tenancies that change.
• Allowances should be made where a high level of recent expenditure on a property can be demonstrated.
• There should be a pilot stage before the regulations are fully rolled out
• Landlords could be given the option of producing a programme for improving their properties within the overall improvement timescales envisaged, showing they intend to make improvements.

Question 1.7 - Do you think that 31 March 2022 is the right date by which all privately rented properties would need to meet the minimum standard?

Please explain your answer.

Table 8: Question 1.7 – Responses by type of respondent.

Type of respondent	Yes	No	Don't know	Not answered	Total
Organisations:
Energy-related private sector	3	1		1	5
Landlord	3	18	2	5	28
Letting agents etc.	5	4	1	2	12
Local Authority	18	2		2	22
Other	2			2	4
Professional body	8	7	2	9	26
Third sector	5	5		1	11
Total organisations	44	37	5	22	108
% of organisations answering	51%	43%	6%		100%
Individuals	29	38	14	9	90
% of individuals answering	36%	47%	17%		100%
All respondents	73	75	19	31	198
% of all respondents	37%	38%	10%	16%	100%
% of all those answering	44%	45%	11%		100%

There was no clear balance of opinion at this question. Of those answering, 45% disagreed that 31 March 2022 is the right date by which all privately rented properties would need to meet the minimum standard, 44% agreed and 11% did not know. Overall, organisational respondents were more likely to agree than individuals (51% and 36% respectively), although again there was substantial variation in the level of support between different organisational groups.

As noted at the previous question, the Shelter Scotland report asked private tenants if they agreed with the dates for starting to apply the minimum standards of E (as at this question) and D (as at the next question). Of the 24 private tenants who answered this question, 14 thought the dates are too far away.

Around 150 respondents made a comment at Question 1.7 and these tended to reflect those already made at Questions 1.5 and 1.6, with variants on 'see above' being the second most frequent comment. The analysis presented below covers other issues raised.

Among respondents who agreed with the proposal comments included that this is adequate, fair, realistic, reasonable, sufficient or proportionate and is in line with timeframes given to social landlords. Some respondents also referred to their earlier suggestions that a higher minimum standard of band D should be implemented by this date, or that the standard should be raised to D after 2022. Others qualified their approval with references to there being: adequate contractor capacity; grants available; exceptions or different standards for certain property types; effective systems and processes must be in place; and resources available to local government to monitor compliance.

The most frequent reason given by respondents who did not agree was that 31 March 2022 is too soon. This suggestion was made by around 1 in 6 respondents. Other reasons, each given by a small number of respondents included:

• General opposition to any minimum standards.
• That exceptions for rural sector, older or hard to treat properties are required.
• That there should be no backstop date.
• That there should be a move straight to a minimum of band D, with a later backstop date of 2024 or 2025.

Around 1 in 7 respondents made suggestions for alternative backstop dates, ranging from immediately, to after 10 years or longer. The most frequently-suggested alternative dates were after 3 years from the start date actually applied, or after 5 years. Respondents making the latter point suggested 5 years would be fairer or more reasonable, or expressed concern about the availability of suitable contractors.

Several respondents also proposed that there should be measures to encourage early compliance. Examples given included discounts on assessments or work through advisory services such as Home Energy Scotland, in partnership with relevant stakeholders.

Need for further consideration of the position of long term tenants was highlighted by a number of predominantly Landlord respondents. It was argued that an exception should be made when a tenant does not give access or when works required at a backstop date would cause serious disruption to sitting tenants or require them to leave the property. It was suggested there should be a requirement for the tenant's consent and that if a tenant would prefer not to have the disruption, they should be able to delay works until a future date or change of tenancy.

The method of proof of compliance was also raised, in particular whether a number of properties of identical construction would require individual EPCs at the backstop date or could be covered by a generic certificate for properties of the same construction.

Further comments on the backstop date included that good landlords will comply before 2022, and that the rules should also apply to unregistered landlords so that all tenants benefit. It was also argued that, whatever decision is reached on deadlines, property owners need as much certainty as possible as to what will be expected of them, and when, in terms of energy performance of their properties.