The NLA welcomes commitments by local and central government to actively promote improvements in energy efficiency and fuel poverty.
Although often overlooked, making energy efficiency improvements help maintain the fabric of properties; damp, mould and frozen pipes are less likely in an energy efficient property and this should keep maintenance costs down. The improvements will also, hopefully, encourage tenants to look after the property.
However, it should be noted that there is a distinction between the responsibilities of the landlord and those of the tenant. The landlord can only improve the fabric of the building. It is the tenant’s behaviour that affects the actual energy usage and local authorities need to address this issue in their promotional activities.
There is a duty on landlords to provide an Energy Performance Certificate (EPC) before the signing of a tenancy agreement in order for prospective tenants to have information about energy costs upfront. The NLA offer a cost-effective EPC service for both NLA and non-NLA landlords alike.
The NLA is actively looking to work in partnership with other organisations to tackle the issue of energy efficiency. We work closely with the Department of Communities and Local Government (CLG) on the energy performance in buildings, HM Treasury on tax incentives for energy efficiency improvements, the Energy Saving Trust (EST), the Department of Energy and Climate Change (DECC) as well as the Local Government Association (LGA) and individual local authorities on grant and loan schemes that landlords can use to improve the energy efficiency of their properties.
Energy Performance Certificates (EPCs)
The purpose of an Energy Performance Certificate (EPC) is to show prospective tenants the energy performance of the dwelling they are considering renting. The NLA can see some merit in the use of EPCs but we believe there are a number of flaws in the current EPC system.
Since 1 October 2008, landlords must provide an EPC, free of charge, to prospective tenants at the earliest opportunity (for example, when they first view a property) and certainly before any tenant takes up a tenancy.
For a rented property the certificate will last for 10 years and can be reused as many times as required within that period. The EPC will contain a Standard Assessment Procedure (SAP) rating, indicating gas and electricity consumption. Each rating is shown on an A–G rating scale similar to charts used for fridges and other electrical appliances. The rating is accompanied by a Recommendation Report that shows how to improve the dwelling’s energy efficiency.
Landlords are free to update an EPC as frequently as they wish (for instance, if improvement work has been undertaken). However, updating an EPC must be done at the landlord’s expense. Whilst this will probably make the property more marketable, it is unlikely to increase the rental value of the property and cost the landlord not only the value of the improvements undertaken but also the cost of the new EPC.
The NLA want to see a greater recognition within the current EPC system for landlords who make energy efficiency improvements. For example, landlords carry out energy efficiency improvements we would like to see recognition of those improvements in the Recommendation Report and free updates to the EPC.
Energy Efficiency Improvements
The NLA believes that the requirements and incentives for improving the energy efficiency of properties should be applied equally across all tenures. We also want to see the Government acknowledge that when a landlord makes energy efficiency improvements, it is the tenants who reap the rewards through lower fuel bills. This is more of a problem for the private-rented sector as private landlords make improvements to individual properties whereas social landlords benefit from the economies of scale and can improve large swathes of their stock at a vastly reduced cost per property and owner-occupiers receive the savings on their energy efficiency improvements.
There are many different central and local government schemes to help landlords improve energy efficiency in their properties. However, many centre on the financial situation of individual tenants rather than the property itself which does not take into account the churn in the private-rented sector. Landlords are concerned that if they take advantage of these measures it will require them to only rent to tenants in similar situations in the future.
It is also important to note that many schemes are time or volume sensitive. The Landlords Energy Saving Allowance (LESA) which provides for £1,500 worth of energy efficiency improvements that can be offset against income tax per property per year expires in April 2015 and the Boiler Scrappage Scheme that began in January only provided vouchers for the first 125,000 households. It is therefore paramount that landlords take advantage of these incentives and schemes before they expire.
The NLA is also concerned that energy efficiency measures may become tied to other social policy objectives (such as adding an energy efficiency element to Council Tax). We suggest that energy efficiency policies should stand alone and not be tied in with other objectives.