Government consults on removing exemption for landlords unable to access 'no cost' financing, but campaigners remain frustrated at decision to cap costs at £2,500
New proposals set out yesterday will require private landlords to pay to upgrade the draughtiest homes in England and Wales.
But campaigners were left frustrated by the proposals, in which the government endorsed a cost cap of £2,500 for upgrade measures - half the £5,000 figure recommended by campaigners and the Committee on Fuel Poverty.
There are currently around 280,000 privately rented homes in England and Wales rated F or G for energy efficiency, representing around six per cent of the total private rented sector.
The new regulations mean it will soon be illegal to rent out such properties until they are brought up to a higher 'E' rating, subject to a cost cap for landlords paying for the upgrades.
The government's impact assessment of the proposals suggests that under a cost cap of £2,500 only 30 per cent of homes rated energy efficiency level F and G would be brought up to the legal minimum standard of E by 2020. In comparison, a cost cap of £5,000 would bring 42 per cent of homes up to E or above.
The lower cost cap will also only result in energy savings for tenants of £390m rather than £727m, the government admitted.
Joanne Wade, chief executive of the Association for the Conservation of Energy, said the proposed cap was too low. "The alternative of a £5,000 cap would double the average energy bill savings for tenants and enable 35,000 more homes to be brought up to the minimum standard," she argued.
But the Department for Business, Energy and Industrial Strategy argued the lower £2,500 cost cap "strikes the right balance between achieving a robust ambition for the policy at a reasonable cost to landlords".
Wade also objected to the government's proposal to include any third party funding landlords access, such as Green Deal finance packages, within the £2,500 cap limit.
"We simply do not understand why third party funding contributions such as ECO or Green Deal Finance, should be included in the cap," she said. "The cap is intended to ensure that landlords are not unduly burdened, and hence financial contributions from other sources should be additional to this and therefore deliver additional energy savings by enabling more homes to be brought up to the minimum standard."
The government's original plan for the regulations was that programmes such as the Green Deal, which provide 'no-cost' financing to homes for energy efficiency upgrades with the savings paid back via energy bills, would bear the upfront cost of energy efficiency improvements.
But since the Green Deal was closed in 2015 the availability of such funding nationwide has been restricted, raising fears the rules could become largely meaningless if landlords could easily register for an exemption on the grounds they could not access financing.
Richard Twinn, policy advisor at the UK Green Building Council, said it is encouraging to see the government finally putting forward proposals for a cost cap, but warned the introduction of the lower cap could leave a "gaping hole" in its own fuel poverty and energy efficiency targets.
"Ever since the demise of the first Green Deal, it has been clear that introducing a cost-cap is the only effective way to implement the minimum standards regulations for privately rented homes," he said. "So, after a year and a half of waiting, it is encouraging to see these proposals finally published."
"Unfortunately, the proposals included in this consultation risk further watering down this vital policy," he argued. "The government's own figures show that setting the cap at just £2,500 per property will mean that the vast majority of the coldest rented properties - 70 per cent of F & G rated properties - will not even need to meet the minimum standard of EPC band E. This could leave a gaping hole in the government's plans to meet its own fuel poverty targets and raises questions about whether the Clean Growth Strategy can be delivered just two months after its publication."
The Green Deal was restarted as a private venture this year, raising hopes that with upfront cost finance packages once again available the rationale for allowing landlords to not comply with the new standards has been removed.
But the government said it is not yet clear whether a nationwide market offering suitable finance products will emerge.
"The government is therefore proposing to take action to amend the Regulations to ensure improvements in the energy performance of F and G-rated PRS homes take place regardless of the long-term availability of Pay As You Save funding, or other sources of 'no cost' funding or subsidy," it explained in its proposals.
But the question remains as to whether a price cap of £2,500 really will allow for widespread upgrades to be carried out, or whether thousands of tenants will continue to be forced to live in highly inefficient homes.
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