Energy efficiency – are landlords and investors getting enough support?

The government has talked plenty about improving the energy efficiency of private rented homes, but despite this rhetoric, only 5% of private rented households have received government help to fund energy efficiency measures despite having the greatest need.

Even though there are more of those classed as fuel poor living in the sector, private rented households have received only half of the help given to those in the social sector.  

The latest English Housing Survey (2019-20) revealed that a third of private rented sector housing was built before 1919, the hardest to treat type of housing. This accounts for a larger proportion of the sector than for any other housing tenure.

Across England’s entire housing stock, 84% of properties built before 1919 had an energy rating of D or worse.

With some 62% of private rented homes having an energy rating of D or below, this largely accounts for why 37% of all households classed as fuel poor are in the private rented sector compared to 23% in the social sector.

Data highlights that 97% of private rented properties with an energy rating of D or lower could reach C or better, but despite this, only 5% of private rented households across England have received any financial support under government schemes to improve the energy efficiency of housing. This compares to 21% of owner-occupiers, 12% of council households and 11% of those in housing association properties.

The government has set bold targets for the energy efficiency of homes to help in its fight against climate change and its goal to reach net-zero by 2050. Ministers want all new private rented tenancies agreed from April 1 2025 to be in properties with an energy performance rating of C or better.

However, according to government figures, it would cost an average of over £7,500 to bring rental properties needing it to an energy rating of at least C.  

With this in mind, the National Residential Landlords Association (NRLA) is warning that this makes the government’s ambitions to improve the energy efficiency of the rental housing stock ‘a pipe dream’ when the average net annual rental income for a private landlord is less than £4,500.

As such, the NRLA is urging a bespoke financial package to support the improvements that are needed.

Among the trade body’s proposals is the development of a scrappage scheme to upgrade windows in private rented homes, with a higher proportion of properties in the sector having no double glazing than any other tenure.

The NRLA is also calling for energy efficiency measures carried out by a landlord to be offset against tax as repair and maintenance, rather than as an improvement at sale against Capital Gains Tax.

This, it argues, would address certain anomalies including one that says replacing a broken boiler is tax-deductible, while replacing one for a more energy-efficient system is not.

“We all want to see energy-efficient rental homes. They cut bills for tenants, make homes more attractive to potential renters and help the country to achieve its net-zero commitment,” Ben Beadle, chief executive of the NRLA, said.

“The Chancellor needs to develop a financial support package that works for landlords and tenants. This should especially be targeted at the hardest to treat properties where the cost of work will be prohibitive for landlords. In this way, he will also be doing the most to help the fuel poor.”