09 Apr 2021

A respected private rental sector body wants the government to slow its timetable for energy efficiency reform, warning that landlords could sell up if the current schedule remains in place.

The Lettings Industry Council has written an open letter to the Ministry of Housing Communities and Local Government, signed by 17 agencies and industry players.

These are Belvoir, Chestertons, Countrywide, Dexters, the Guild of Lettings Management, Hamptons, Hunters, JLL, Kinleigh Folkard & Hayward, Knight Frank, Max Estates, Maxine Lester Lettings and Property Management, Penhurst, Savills, Seraph Property Management, Spicerhaart and Squires Estates.

They welcome the government’s interest in seeking eco-improvements in the private rental sector but have grave concerns about timescales – currently taking the sector to 2025 – and the effect of short term demands on the viability of many landlords. 

“With no information on how or when owner occupiers will need to comply with these energy efficiency requirements, more landlords may decide to sell to avoid the pressure of having to spend additional money on their properties” warns TLIC.

The Lettings Industry Council was set up in 2015 and looks at issues across the sector, including regulation of agents as well as landlords, and government legislation and proposals.

The open letter says: “We welcome Government taking action to improve energy efficiency in privately rented homes and fully support the need to improve our carbon footprint. However we would like to communicate the issues we foresee with the proposal set out in the consultation and offer our thoughts on an alternative solution. 

“The timeframe proposed in respect of implementing a minimum C rating is far too short. Landlords need time to recover from the financial hardship caused by Covid-19, relating to both personal and rental circumstances before being asked to invest further into the potentially significant refurbishment of their rental properties. In addition to many landlords dealing with rental arrears or rent reductions this year, tax breaks have been lost due to S24 of the Finance Act, electrical regulations have led to more expense and fees increased since the implementation of the Tenant Fees Act. 

“Stock levels outside of London are already low in the Private Rented Sector and we run the risk of more landlords exiting the market as further legislative pressures are added. The SDLT holiday introduced this year has already resulted in landlords deciding to sell their properties. With no information on how or when owner occupiers will need to comply with these energy efficiency requirements, more landlords may decide to sell to avoid the pressure of having to spend additional money on their properties. This could lead to a rise in homelessness if tenants are not able to purchase a property themselves, for example in recent years, and particularly in 2020, the sector has seen a significant increase in tenants signing up to receive Universal Credit. 

“If the maximum investment cap for energy efficiency works is increased to £10,000 this, along with additional competition due to less stock, will inevitably lead to rent increases which will most significantly impact those on low income and typically the more vulnerable groups of tenants.

“The consultation states that any money that a landlord spends on energy efficiency refurbishment works prior to 2023 will not be counted towards the cap. This means if the works are going to cost more than £5000 and they are carried out before 2023 then landlords will find themselves having to spend more money than the cap states.”

The Lettings Industry Council then sets out what it calls its alternative proposals.

“By April 2026: all new and renewed tenancies to have a minimum of D rating which is the average rating for all homes. 

“By April 2028: all existing tenancies to have a minimum of D rating and all new and renewed tenancies to have a minimum of C rating 

“By 01 January 2030: all existing tenancies to have a minimum of C rating. 

“Bring the start date forward for the refurbishment works cap from 2023 to 2020. We believe this will reduce the pressure on stock available in the PRS market whilst still achieving the overarching goal of  all properties in the PRS (unless exempt) achieving a C rating by 2030.” 

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