As reports of landlords selling up continue to filter through, a recent debate in the House of Lords revealed how the government is still some way off finalising the energy upgrade measures for rental properties.
Speaking at a public bill committee meeting on the Energy Bill, Energy Minister, Andrew Bowie, appeared to pour cold water on any hope of landlords seeing final legislation this year.
When asked why it was yet to produce a full response to the consultation on improving the energy performance of privately-rented homes – which opened in 2020 – Bowie told members it would publish a “summary” of responses by the end of the year.
He told the committee it was continuing to “refine the policy design” to ensure the costs and circumstances relating to energy efficiency improvements are “fair and proportionate” for landlords and tenants. He cited the recent economic headwinds as having added to the difficulties.
Bowie’s comments were made in response to calls from the Shadow Energy Minister, Alan Whitehead, to fast track a number of points from the consultation into the ongoing Energy Bill – such as the need for all tenancies to carry an Energy Performance Certificate (EPC) of at least Level C by 31st December 2028.
His calls were rejected, with a number of concerns being raised by other MPs in relation to rushing the proposals without the proper framework in place.
Alec Shelbrooke, the Conservative MP for Elmet and Rothwell, spoke about some of the issues his constituents have seen with heat pumps. In some instances, he says, constituents have complained that once installed, if not fitted alongside a system upgrade, the pumps do not work due to the pipe network not being big enough for the pressure.
He used this as an example of “running too fast” in a particular direction. He also spoke about landlords in his constituency already ‘dumping’ rental properties in anticipation of having to spend £10,000 on energy efficiency measures – putting yet more pressure on the rental market and rents.
It is safe to say the original cited deadline of 2025 for all new tenancy rental properties to carry an EPC rating of C or above now looks extremely unlikely, if not impossible. It was widely reported earlier this year that the deadline would be extended to 2028, with some believing an announcement was imminent.
While some might contend that now would be bad timing for the legislation, given the recent hikes in buy-to-let rates and the growing legislative pressures landlords already face. Others might counter there will never be a good time for the legislation to be introduced.
Clearly, aspects of the legislation do need careful consideration, such as some of the technicalities around EPC calculations and the framework for retrofitting properties. Yet, given the consultation was first put forward in 2020 – nobody could accuse the government of rushing through its plans.
The unfortunate side effect of the number of false starts the legislation has seen means we may have seen a knee jerk reaction from some landlords who feared the legislation was coming sooner rather than later.
Even before the recent rate hikes, the number of landlords planning to sell their rented properties reached its highest rate on record according to research consultancy, BVA-BDRC.
It found that in Q1 2023, 33% of private landlords in England and Wales said they planned to cut the number of properties they rent out. This is up from the 20% who said they planned to cut the number of properties they let in Q1 2022.
Of course, we are still in the space of when, not if, the legislation will be announced.
While the government and mortgage industry have done a good job in relaying the message that the legislation is coming, legislators have perhaps not been quite as good at keeping up the pace when it comes to finalising it.
While the energy efficiency measures were designed to make life better for tenants, as delays continue, the uncertainty and the impact it is having on the rental sector risks escalating problems even further – particularly for landlords. As ever, certainty and clarity are at a premium, but until we get them, expect to see more of a negative impact than the positive one the measures are supposed to usher in.
Simon Jackson is managing director of SDL Surveying
References:
https://www.theyworkforyou.com/pbc/2022-23/Energy_Bill/09-0_2023-06-13b.264.5?s=estate+agents#g269.0
