The BEIS Secretary of State has commissioned an independent review of the UK Government’s approach to delivering its net zero target, to ensure they are delivering in a way that is pro-business and pro-growth.
Propertymark is supportive of the UK Government’s net zero aim, but our evidence highlighted the impact it will have on landlords and the sales and letting sector. Without realistic timeframes and a package of financial support, any targets within the private rented sector are unlikely to be met.
Main obstacles
BEIS’s vision for decarbonising England and Wales’s PRS stock is achieved by the Minimum Energy Efficiency Standards. The department is considering further moves by making it mandatory that all properties on the market in the PRS, will have an Environmental Performance Certificate of at least a B by 2030.
The new and revised cost cap of up to £10,000 will be challenging for all types of landlords especially those with small portfolios and those landlords with properties with low house price values.
We warn that the devastating impact of the pandemic, confusion over the absence of a long-term strategy and the lack of financial support, is likely to lead to further shrinkage of supply in the PRS. This is going to be hardest felt in parts of England and Wales with the lowest house-price values and subsequently where economic growth is sluggish.
The UK Government must get realistic to the challenges in decarbonising the PRS which has some of the oldest housing stock, most off-grid properties and high numbers of vulnerable tenants. Landlords need to be supported in improving stock gradually otherwise we may see a continuation of landlords exiting the market.
Support for the landlords
We call for a package of financial and taxation incentives to support landlords get their properties up to scratch while continuing to provide housing options for many. These include:
- The reintroduction of the Landlords Energy Saving Allowance (LESA), which let landlords claim on their income or corporation tax return against the cost of buying and installing certain energy-saving items. Tax relief was for a maximum of £1,500 per property.
- Additional funding at local authority level that is tenure blind that addresses the challenges the PRS has in obtaining grant funding.
- Implement a new streamlined Green Homes Grant that is flexible to the sector’s needs. Our experience with the UK Government’s recent Boiler Upgrade Scheme has shown that the application stage must be straightforward and user-friendly.
- Consider tax incentive measures such as a reduction in VAT for energy efficiency measures or incentives for landlords and home buyers through stamp duty.
Retrofit programme
Propertymark also called on the UK Government to embark on a national communications campaign for tenants, landlords and owner-occupiers. A central part of enabling a retrofit revolution on the path to net zero will be adequately conveying the wider benefits to homeowners and landlords.
The Chancellor’s indication of a shift in the focus from the UK Government aligns with what we have been saying for a long time now, that improving the poor energy efficiency of the UK’s housing stock is the most effective way of reducing householders’ bills and the reliance on imported energy.
Our estate agent members say EPC ratings are moving up the list of factors home buyers are assessing when viewing properties and our member letting agents say their landlords in England and Wales have largely rejected the flagship Boiler Upgrade Scheme because grants do not cover the installation costs that can costs as much as the equipment itself.
Propertymark supports the UK Government’s aim to be Net Zero by 2050 and recognises the housing must contribute. But to get the sector on board it will need more joined up thinking from across Whitehall departments.
