Recently we have heard of the UK’s need to retrofit energy efficiency measures in a house every minute between now and 2050 to meet 2050 emissions target reductions . This need to retrofit is particularly related to reducing energy needed for heating which makes up about 60% of a households energy use. Of course this is a massive challenge which will require large amounts of investment. It is however entirely necessary and imperative that the improvement of the UK housing stock takes place.
Fuel poverty in Wales stands at 23% of households in Wales. UK housing stock is some of the oldest in Europe with 15 million (or approximately 56%) households built pre 1960 and 5 million of those pre 1920. Improvement of the housing stock would have a host of knock on benefits, from health and well-being., to economic stimulus and of course, reduced carbon emissions. But how do we do this? Who will pay for it? I have a suggestion which I think could provide an elegant solution to many of the problems associated with housing in Britain. Most specifically in privately rented accommodation where standards are lowest and the need greatest. I focus on private accommodation as social housing already has targets it has to meet for efficiency and the tools are there to encourage housing associations and councils to improve their properties. No such incentives exist for private rented accommodation, except for the minimum standard of an F in energy efficiency (which is laughable). Private tenants have the least power to improve the efficiency of their homes and private landlords are making a killing on high rents for poor quality properties, at great cost to the tax payer through housing benefit. Private sector rents make up 14% (and increasing) of Welsh housing.
My proposed solution is this. All rental accommodation already has an energy efficiency rating from F-A. Why not bring in rent caps based upon the energy efficiency rating of the home? For example set the median rent for the area (not the average as you don’t want a few very expensive properties to skew the figures) around an energy efficiency rating of C. This efficiency rating would be higher than most privately rented UK homes and to continue charging that rent the landlord would have to invest in improving the property or suffer a reduction in rental income. If the landlord improves the property they can charge more rent up to the maximum for that energy efficiency band.
This approach has many benefits. First, tenants in properties with low energy efficiency with landlords that choose not to improve the house will benefit from a significant reduction in rent charges. I would suggest making the rent caps progressively more severe for homes of lower efficiency. For example a home with a C efficiency rating would have a maximum rental charge per person of say £300 per month, D would be capped £100 less at £200 per month, E would be a further £100 less at £100 and so on. This scale would change over time (much like the new road tax laws) with the amount chargeable for lower energy efficiency properties and the minimum standard for rent decreasing over time. If this came in in 2018 for example, then maybe by 2020 you wouldn’t be able to privately rent out a D band property any longer and a C band property would have a cap £200 lower than an A band property. This is entirely reasonable when placed within the context of climate change, disproportionately high rent prices and a correspondingly high housing benefit bill of £27 billion and climbing.
The range of positive effects from these changes include;
- Housing benefit bill lowered.
- Economic boost from reduced rent prices and reduced energy bills leading to increased spending by private tenants.
- Economic boon from housing efficiency improvements. Companies providing insulation, solar power, geothermal, battery storage, mechanical ventilation and heat exchangers would all get an increase in business leading to job creation. A bigger market should also lead to reductions in cost of energy efficiency installation due to competition and markets of scale.
- Health and well-being. benefits, including NHS savings, from warm and dry houses with people that have less precarious finances. A study in Northern Ireland gave NHS savings of 42p for every £1 spent on fuel efficiency.
- Carbon emission reductions at a significant scale, not just in the heating of homes but in electricity generation and consumption also.
All of this could be done at a low cost to government. Landlords are some of the most wealthy people in the UK as multiple property owners and for too long have been able to charge extortionate rents for low quality accommodation. This has also led to a boom in the buy to let market, further increasing property prices. Landlords who do not wish to invest and improve their properties for long term improvements in return can always sell their properties. If enough landlords do sell it may even bring down house prices. Note that this would only really affect those homes that had lower energy efficiency standards, so older houses or new houses that have not been built to a high standard. I think most would agree that these inferior properties deserve a lower price tag.
You do not even need to pay for enforcement. Simply put the money into an advertising campaign advising residents of the maximum amount they should be paying for a property of a given energy efficiency rating, including making it a legal requirement for rental contracts to declare the relevant information.
Down the line, as homes are re-tested for energy efficiency you could also include other metrics such as the amount of natural light, access to green space, storage space, room size/space per occupant, ventilation and put these together into an overall score of quality (again could be F-A), continuing the drive for higher housing standards. An good name for the initiative could be the ‘Healthy Homes’ standard. Let’s create homes that are fit for humans in the 21st Century.
These proposals may sound bold, ambitious and maybe you think, idealistic. However this is exactly the attitude Government needs to take if it is to meet current and future challenges of climate change, economic change and social change. Indeed, in the form of the Well Being and Future Generations Act the Welsh Government is unique in having a legislative driver to think, plan and deliver in this bold, ambitious way. My challenge to the Welsh Assembly is this. Forget how things are now and think about how they could be better, using the Future Generations goals as a guide. Think about which aspects of people’s lives have the most impact on the economic and social health and well-being. Now think about how changes in different areas could help meet those goals. I would think people would be unsurprised to find that housing and energy came out at the top of the list.
All articles published on Click on Wales are subject to IWA’s disclaimer.