Concern over new energy efficiency proposals

The CLA is warning that new proposals aimed at improving the energy efficiency of homes could inadvertently lead to a mass sell-off of over 50,000 privately-rented homes in the countryside - pushing up rent prices and intensifying the rural housing crisis.

In September, the Government proposed to increase the minimum energy efficiency rating from Band E to Band C for new tenancies from 2025 and for all existing tenancies from 2028. The proposals also recommend increasing the landlords cap – the maximum amount of money a landlord must invest to improve a property’s energy efficient rating – from £3,500 to £10,000. This investment needs to be made every 5 years to allow the property to continue being rented if its energy efficiency rating remains below band C.

While decarbonising rural homes is an important contribution to tackling climate change, these regulations are based on an assessment methodology which continually undervalues the energy efficiency of older, off-gas grid homes. This means that many rural homes will never be able to reach the tightened minimum standards simply due to how they are measured, which is likely to result in landlords selling these houses. In addition, these regulations would mandate tens of thousands of pounds worth of potentially harmful measures to older buildings, such as solid wall insulation.

To help landlords pay for the upgrades, in September, the Government launched the Green Homes Grant, a £2bn scheme to fund at least two thirds of the cost of upgrading the energy performance of homes, up to £5,000.

However, all upgrades must be undertaken by Trustmark installers. There is a severe shortage of rural TrustMark installers, partly due to the cost of membership. The demand has been so high that urban accredited firms have no interest in travelling to remote areas, when there is work on their doorstep. This has led to rural homes not having access to the grant, despite being the least energy efficient and arguably the most important to decarbonise.

Modelling from the CLA, which represents 30,000 rural businesses across England and Wales, shows that a 12.4% reduction of rural privately rented sector homes, which do not currently meet energy efficiency rating of Band E, would result in 51,653 fewer rural privately let homes.

Over half (60%) of the CLA members who responded to a recent survey let at least one Assured Shorthold Tenancy below market rent and nearly a quarter of their Assured Shorthold Tenancies were let below market rent, with members in effect acting as a social housing provider. The costs of trying to meet the new standards are unaffordable for these lower-rent homes and the works required may have the unintended consequence of displacing older, vulnerable tenants.

If landlords were able to make the £10,000 investment to improve energy efficiency rating, rent would have to increase by 6% a year for the next 15 years to recoup the money. This is simply not an option, especially in rural areas where 90% of rents are already being deemed unaffordable to key workers. A sell-off would force people to leave their homes and communities and exacerbate the rural housing crisis.

The CLA is calling for:

• The assessment methodology for EPCs to be fundamentally reviewed so that rural homes are accurately assessed;
• The metric used for the minimum energy efficiency standards to be based on carbon (environmental impact rating) not fuel cost (the current method of energy efficiency rating);
• The Green Homes Grant, or similar, to provide targeted funding of £10,000 to rural homes to enable their transition to low-carbon heating.

Mark Bridgeman, President of the CLA, said:

“Our members play a crucial role in the provision of homes in rural communities across the country. But this new raft of Government legislation could have a devastating impact for those who live and work in the countryside.

“There is already a rural housing crisis- and this will only increase if a large portion of the existing rental stock ends up being sold, as it is no longer economically viable for landlords to retain.

“Our members understand the importance of decarbonising these houses and want to do their bit in helping the environment, and many have already invested significant sums on renewable options. Some insulation solutions will work in rural homes, but many of the ones that work on old houses are often incredibly expensive.

“The unique challenges that affect rural properties in decarbonising seem to have been forgotten about in the new policy proposals. If the government are serious about decarbonising rural properties, they need to support and invest in the sector. Rural areas are so often left behind with Government initiatives and this must not continue.”