What’s a reasonable standard of energy efficiency for private rented homes?

Energy efficiency in UK homes has improved since 2004. New data on energy efficiency standards reflect home owners’ steady investment in new boilers, lighting and insulation. But are we going fast enough?

BRE’s latest briefing discusses the progress we’ve made on energy efficiency over the last twenty years. But are we going fast enough, particularly in the private rented sector?

And – with a newly issued consultation on minimum energy efficiency standards (MEES) for rented homes - how is the UK government proposing that standards will evolve to require reasonable energy efficiency?

Over half of homes at EPC C

An Energy Performance Certificate (EPC) rating of C has long been used a marker of reasonable energy efficiency in UK government programmes. If your home is EPC C or better, your household won’t qualify for assistance under some of the official funding schemes that help with insulation and other retrofit measures, particularly those targeted at fuel poor households.

More and more homes are reaching the EPC C standard, on what is more formally known as the certificate's Energy Efficiency Rating (EER). The latest English Housing Survey shows for the first time that over half - 52% - of English homes are EER C or better. That's up from 4% in 2004, driven by a wide range of home improvements that homeowners have carried out over the past two decades.

A new way of measuring reasonable energy efficiency: the “equivalent” to EPC C

Nowhere is a policy focus on a reasonable standard of energy efficiency more important than the private rented sector (PRS), where it's up to thousands of private landlords to keep homes in good repair and up to date. Private rented homes are more likely to be below the C standard than owner-occupied or social homes.

That's why the UK government announced, almost from its first days in office, a plan for higher minimum energy efficiency standards (MEES) in private rented homes, to take effect by 2030. These would be based on the EER C threshold.

This month's new MEES consultation refines that plan: it proposes that the minimum standard will be based on EER C or "equivalent". The government's proposed approach - up for discussion by consultation responders - is for the "equivalent" for EER C to use multiple new standards.

The proposal is that landlords of less energy efficient homes would be required to invest up to a £15,000 cap to meet first a standard based on an EPC fabric (insulation) performance metric, “which is likely to require similar improvement measures as meeting an EPC [EER] C.” Landlords will then need to “meet a standard set against either the heating system metric or the smart readiness metric.” (For more information on these proposed new metrics see the current EPC consultation).

To protect landlords who invest in upgrades before this new system is introduced, homes that already achieve a rating of EER C on an existing EPC would be considered compliant until their existing certificate expires.

The plan to move away from the Energy Efficiency Rating metric comes as no surprise. The EER is based on the cost to heat and light the home and, as such, has been criticised for only indirectly reflecting insulation and heating system performance. Nonetheless, BRE believes that the EER energy cost indicator on the EPC will continue to provide vital information, particularly for homes at risk of fuel poverty.

We need to install energy efficiency upgrades at a faster pace

There will undoubtedly be much debate about the approach to standards proposed in the MEES consultation. But, in the end, the key issue is delivery: making sure all private rented homes get to a reasonable standard of energy efficiency, where practicable, sooner rather than later.

There has been real progress in energy efficiency, in the PRS as in other tenures. But, based on the EER C standard, the data shows that we need to be going further and faster, to reach that reasonable standard across homes in the next ten years.

The tighter MEES policy will potentially bring the large majority of private rented homes to a reasonable standard by 2030. The government is proposing that landlords will have to invest up to £15,000 to meet the new MEES standard. The latest official English Housing Survey data (Annex Table 2.15) shows that 91% - 2.3m out of 2.5m below C private rented homes – can be improved to meet EER C for £15,000 or less. One million nine hundred thousand, 76% of currently below C PRS homes, could be improved to reach the standard for £10,000 or less.

Leadership by local and regional authorities is key

But it won’t be enough just to set the higher MEES standard in regulations.

That's why an effective MEES policy is vital.

The UK government is clear that, for rented homes, energy efficiency is not an isolated issue. As well as higher MEES standards, there will be a new Decent Homes Standard for the private rented sector.

BRE is welcoming that wider quality approach. As well as setting standards, the focus must be on making sure councils and strategic authorities have the staff and data they need to work with landlords on monitoring and enforcing standards.

Authorities are already innovating in the support they provide to landlord. BRE is working on South Yorkshire Mayoral Combined Authority’s Let Zero project, a £2.8m project funded by Innovate UK to help landlords deliver better homes, tailored to meet the needs of their tenants.

Getting the right pace of retrofit in rented homes needs higher standards, plus effective monitoring by councils, plus support for landlords. That will increase retrofit delivery to provide the warm, affordable, low carbon housing that tenants in England and Wales need.

Read the report